KongZhong spends $16 million on a 7% stake in Forgame

Chinese PC and mobile publisher KongZhong (NASDAQ: KZ) has announced it's taken a stake in rival game publisher Forgame.

The deal sees KongZhong spending US$16 million on a 7 percent stake in Forgame, which floated on the Hong Kong stock exchange under the ticker HKG:00484 in October 2013

Like companies such as King (NYSE:KING) and Zynga (NASDAQ:ZNGA) in the west, Forgame's float hasn't been successful, with its share price currently down 80 percent compared to its float price of HK$64.50

As part of the deal, Forgame's chairman and chief product officer also increased their stakes in the company, although this was triggered by two of the company's founding shareholders selling their shares.

Better together

KongZhong called the deal a "strategic investment", saying that it expected to drive through synergies between the two companies.

Forgame operates over 40 PC and mobile games, while its 91wan publishing platform has over 100 games and over 207 million registered players.

The company has no debt and cash and equivalents worth around US$180 million.

[source: KongZhong]