TOM Online Inc, China's leading wireless Internet company, announced on Friday that it would buy an 80.6 per cent stake in Indiagames for $17.73 million in cash.
The investment will help TOM Online establish its wireless game presence in India and China, but also vastly broaden its horizon for growth globally.
Indiagames is India's largest wireless game developer and global publisher of mobile entertainment content, and has 160 employees.
TOM Online has acquired around 77per cent of Indiagames' existing shares from investors including Infinity Ventures, IL&FS Investment Managers and the management team of Indiagames; the rest of the shares will be in the form of new shares valued at $4 million.
Key management staff, including founder Vishal Gondal, will retain the remaining 19.4 per cent share in the company and continue to run the operations of the company.
Ernst & Young India, had advised IndiaGames on this transaction.
Founded in 1999, Indiagames has been profitable for the past two years with a net margin of about 50 per cent.
TOM Online believes Indiagames will help catapult its integrated Internet products and services onto the world stage with access to truly global partners and distribution channels, a first for any Chinese portal, further enhancing its business growth both inside and outside China.
Wang Lei Lei, TOM Online Chief Executive Officer and Executive Director, said, "TOM Online has successfully built a strong leadership in China's wireless Internet sector, which makes Indiagames the most befitting addition to our existing business lines."
"It will be the driving force behind our game-related services development and expansion in the Indian wireless internet sector. There are tremendous synergistic opportunities between Indiagames and TOM Online that will enable us to utilise each other's strengths in our respective markets in areas such as content, services, worldwide distribution channels, partnership referrals and market knowledge."
Gondal, who is also chief executive officer of Indiagames said, "This is a unique alliance of the Asian Tiger and the Indian Elephant. We are very excited to be part of the TOM Online family. Indiagames already has a strong presence in major markets like Europe and North America, and a major market share in India in the wireless gaming segment."
"With TOM Online's popular online platform and expertise in China's local wireless entertainment business, we will have access to a total of more than 1 billion mobile phone users and gain a leadership position in the two largest emerging wireless entertainment markets in the world -- India and China," Gondal said.In the past 12 months Indiagames has licensed several key brands like Bruce Lee, Predator, Buffy The Vampire Slayer, The Mummy, Scorpion King, Jurassic Park 1, Jurassic Park 2, Jurassic Park 3, Garfield, The Day After Tomorrow, Spy Kids, Indian Idol, Singapore Idol, Malaysian Idol, Indonesian Idol and Phantom.