STOCKHOLM (Reuters) - MTG (ST:MTGb) shares leapt as much as 25% on Monday after the Swedish e-sports and gaming firm said Chinese live streaming platform Huya (N:HUYA) would buy a stake in its Turtle Entertainment (ESL) business and help it expand into China.
Huya, backed by internet giant Tencent (HK:0700), will invest $30 million in ESL, giving the whole of ESL an enterprise value of $425 million, MTG said.
That is more than investors had priced into MTG shares, according to SEB analyst Mathias Lundberg.
"MTG owns 82% of ESL, which values their stake at 3.4 billion Swedish crowns ($354 million), which is much more than investors had discounted in the share," he said.
MTG shares jumped to a six-week high in early trade and were up 14% to 86 crowns at 0925 GMT, valuing the company at around 5.7 billion crowns.
Huya and ESL, the largest e-sports company in the world, will also form a joint venture, while ESL will issue $22 million worth of new shares to facilitate further expansion, MTG said.
"We are excited to announce this term sheet for an important strategic partnership which provides us with a strong partner in Huya to pave the way for a successful ESL expansion into the thriving Chinese e-sports and gaming market in due time," MTG Chief Executive Jørgen Madsen Lindemann said in a statement.
The Chinese e-sports market is expected to generate revenue of $210 million this year, overtaking western Europe as the second-largest e-sports region globally, MTG said.