Tencent to merge QQ Music service with China Music Corp to create streaming giant
New company to run services including Kugou and Kuwo, all of which will continue to operate as independent units and brands
Tencent Holdings Ltd is merging its music-streaming business with market leader China Music Corporation in a bid to create a dominant player in China’s digital music industry.
The internet giant said on Friday its QQ Music service and China Music Corporation will form a new company, in which Tencent would have a controlling stake.
The deal is valued at US$2.7 billion, according to the Wall Street Journal, which cited people familiar with the matter.
China Music Corporation runs two of the country’s most popular music services, KuGou and Kuwo. The merging of the top three music-streaming services in China will transform Tencent into the leader of China’s online music industry.
According to data from market research company iiMedia Research, China Music Corporation’s KuGou and Kuwo hold 28 per cent and 13 per cent market share, respectively, while QQ Music holds 15 per cent.
Tencent said the merger was “paving the way” for an initial public offering (IPO) for the newly-formed company. Prior to the merger, China Music Corporation reportedly targeted an IPO in the US.