As reported by the South China Morning Post, Tencent has been holding discussions with the companies about a potential merger over the past few months. Currently, the tech giant holds a majority stake in Huya, as it holds 37 per cent. However, the company first invested $462 million in the streaming platform in March 2018.
Furthermore, Tencent owns 38 per cent of DouYu, which it also invested in back in 2018, putting $632 million into the company.
However, should the merger come to pass, it is believed that the Chinese company will look to become the largest shareholder in the combined firm. Furthermore, merging Huya and DouYu would result in a platform that boasts 300 million users with a market value of $10 billion.
"As the major shareholder of both platforms, Tencent would benefit because a merger would remove unnecessary competition between them. The enlarged scale can also help to drive cost synergies and fend off emerging competitors," said Bloomberg Intelligence analyst Vey-Sern Ling.
If Tencent can bring the companies to an agreement, it would give the tech giant some good news given US president Donald Trump has just dealt it a blow as he seeks to ban WeChat.