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Chinese Internet Conglomerate Tencent to Invest in Kadokawa

Publisher Kadokawa announced on Friday that Chinese internet conglomerate Tencent Holdings will acquire a 6.86% stake in Kadokawa for 30 billion yen (about US$264 million) and become the company's third-largest shareholder. Hong Kong-based Tencent subsidiary Sixjoy will buy 4.86 million shares for 6,170 yen (about US$54) per share, which is a 2.3% premium to its closing price. The transaction is expected to take place between November 15 and 26.

Kadokawa stated that it will enter an agreement with Tencent Group for the anime business "to further promote the company's IP-based Global Media Mix," and "to form a capital alliance with Tencent Group." The company will invest the entire proceeds in content by March 2024. This includes securing editors and producers.

The Master Trust Bank of Japan and Cacao-based investment fund KSD－NH will remain Kadokawa's first- and second-largest shareholders following the transaction, and former representative director and president Nobuo Kawakami will become the fourth-largest.

Earlier this year, Kadokawa formed a capital alliance with CyberAgent, Inc. and Sony to strengthen its game and animation businesses. The company's goals are to strengthen the Global Media Mix Strategy to expand Kadokawa's IPs worldwide, and to cooperate with CyberAgent and Sony for "mutual exploitation of each other's business, expertise, and other strengths." Kadokawa will issue CyberAgent and Sony 1,422,475 shares each, which will give each company 1.93% ownership.

Kadokawa Corporation, along with entertainment company Akatsuki Inc., video distribution company The Anime Times Company Inc., and electronic commerce company DMM.com LLC invested in MyAnimeList stock through a third-party allotment earlier this year.

Kadokawa Corporation acquired the U.S. light novel and manga publishing company J-Novel Club in April.

Kadokawa reorganized its corporate structure in October 2020. The company replaced its previous six departments with 13 different groups, each of which has a "chief officer" executive bearing the title of their respective group. Kadokawa noted that the restructuring would allow the company to achieve a more flat and horizontal corporate structure.

Tencent invested 65.7 billion yen (about US$567 million) into retail company Rakuten in March.

Tencent, through its Hong Kong-based Image Frame Investment subsidiary, acquired 8.6 million of shares in Marvelous, along with 708,600 of primary shareholder Hayao Nakayama's shares and 2.83 million of Amuse Capital's shares, in May 2020.

Platinum Games announced in January 2020 that it has received a capital tie-up with Tencent. Square Enix and Tencent announced in August 2018 that they had agreed to form a strategic partnership. The companies are establishing joint ventures, jointly developing AAA titles based on new IP, and licensing existing IP to expand content services both in the Chinese market and globally.

Sources: Nikkei Asia, Animation Business Journal (Tadashi Sudo)