CVC, iDreamSky talks for Hong Kong’s Leyou buyout have stalled
- The new buyout proposal is said to value Leyou at US$1.2 billion, down from an initial US$1.4 billion
- Leyou’s Canadian subsidiary, Digital Extremes, publishes the hit free-to-play shooter game Warframe
Talks between iDreamSky Technology Holdings and CVC Capital Partners to jointly acquire a Hong Kong-listed video games company have stalled, as the Covid-19 pandemic roils financial markets, according to people familiar with the matter.
Although the suitors had lowered their offer for Leyou Technologies Holdings in recent weeks, the coronavirus outbreak has affected negotiations between iDreamSky and CVC over valuations as well as due diligence, the people said.
The new proposal valued Leyou at US$1.2 billion, down from an initial US$1.4 billion, said the people, who asked not to be identified as the discussions are private.
iDreamSky, which counts Tencent Holdings among its investors, remains committed to the takeover and is seeking other co-investors to join the deal, the people said. As credit markets tighten, iDreamsky is turning to Chinese lenders for financing, the people said.
No final decision has been made, and iDreamSky and CVC could still decide to go ahead with their planned deal, the people said.