HUYA Inc. (NYSE:HUYA) made a preliminary non-binding proposal to acquire DouYu International Holdings Limited (NasdaqGS:DOYU) from Tencent Holdings Limited (SEHK:700) and others on August 10, 2020. HUYA entered into an agreement and plan of merger to acquire DouYu for CNY 4.3 billion on October 12, 2020. The transaction will be by way of a stock-for-stock merger, wherein Huya would acquire each outstanding ordinary share of DouYu in exchange for an agreed number of newly issued Class A ordinary shares of Huya, which would be mutually agreed among Tencent, the independent members of the Huya Board and the independent members of the DouYu Board. DouYu would sell each outstanding ordinary share in exchange ratio of 7.3 validly issued, fully paid, non-assessable Class A ordinary shares of Huya and each DouYu shares represented by American depositary shares issued and outstanding will be cancelled in exchange for the right to receive 0.730 ADS of Huya, each representing one Huya Class A share. In a related transaction, Tencent agreed to acquire an additional stake in HUYA Inc. from JOYY Inc. and Rongjie Dong on August 10, 2020. Because of these agreements, Tencent will increase its stake in Huya to 51%. Tencent has also entered into a separate share transfer agreement with Shaojie Chen, pursuant to which Tencent will, immediately before the closing of the merger, 3.7 million DouYu shares subject to the satisfaction of customary closing conditions, which upon completion Tencent's voting power in the combined company held through its affiliates will be 67.5% on a fully-diluted basis. In a related transaction, on October 12, 2020 DouYu and Tencent entered into a Reassignment Agreement pursuant to which Tencent will assign its interests in the game live streaming business operated by the Tencent group under the "Penguin e-Sports" brand to DouYu. If completed, the transaction will result in DouYu becoming a privately held and wholly owned subsidiary of Huya and DouYu ADSs will no longer be listed on The NASDAQ Global Select Market. In case of termination, DouYu shall pay to Huya termination fee in cash of $44 million (CNY 296 million) and Huya shall pay to DouYu termination fee in cash of $177 million (CNY 1.1 billion).

Upon completion, the DouYu team would become the major management team, while Huya's management team will quit. Upon completion, Rongjie Dong, current Chief Executive Officer of Huya, and Shaojie Chen, current Chief Executive Officer of DouYu, will be Co-Chief Executive Officers of the combined company and Shaojie Chen, together with the members of Huya's Board of Directors will be the members of the Board of Directors of the combined company.

As on August 17, 2020, DouYu International formed a special committee of independent directors consisting of Zhaoming Chen, Xi Cao, Xuehai Wang and Zhi Yan. The Special Committee will review and evaluate the proposal. The transaction is subject to closing of the Reassignment Agreement. The Board of Directors of each of Huya and DouYu, acting upon the unanimous recommendation of the respective special committee, unanimously approved the transaction. The Board of Directors of DouYu also unanimously resolved to recommend that DouYu's shareholders vote to approve the transaction. JOYY Inc., Huya's significant shareholder, has also provided its written consent to the execution, delivery and performance of agreement. The transaction is subject to customary closing conditions including the approval of the shareholders DouYu representing at least two-thirds of the voting power of the DouYu shares. Tencent along with Shaojie Chen and Wenming Zhang, the Chief Executive Officer and co-Chief Executive Officer of DouYu, have agreed to vote all of DouYu's shares and DouYu ADSs they beneficially own, representing approximately 54.6 % of the voting rights, in favor of the authorization and approval of the transaction. The transaction is subject to the effectiveness of the Form F-4, approval for listing of the new ADS issuable by Huya on the New York Stock Exchange and approvals from the requisite governmental entities. As of July 10, 2021, Chinese antitrust regulator decided to block the plan of merger between Huya and DouYu on antitrust grounds. The State Administration Of Market Regulation (SAMR) said the decision was made after reviewing additional concessions proposed by Tencent for the merger. The transaction is expected to close during the first half of 2021.

Morgan Stanley Asia Limited acted as the financial advisor and financial opinion provider for the special committee of DoYou for a fee of CNY 26.8 million($4 million). Howard Zhang and He Li of Davis Polk & Wardwell LLP acted as the legal advisor for the special committee of DoYou. Hankun Law acted as PRC legal advisor to the DouYu Special Committee. Ogier acted as Cayman Islands legal advisor to the DouYu Special Committee. JPMorgan Chase Bank, N.A. acted as the depositary for DouYu. Z. Julie Gao, Peter Huang and Haiping Li of Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor to the special committee of independent and disinterested directors of Huya. Citigroup Global Markets Inc. acted as independent financial advisor and fairness opinion provider to the Huya Special Committee. Haiwen & Partners acted as PRC legal advisor to the Huya Special Committee. Maples and Calder (Hong Kong) LLP acted as Cayman Islands legal advisor to the Huya Special Committee. Deutsche Bank Trust Company Americas acted as the depositary for Huya. Frank Sun, Benjamin Su, Zheng Wang, Christopher Drewry, Greg Roussel, Bradley Faris, Alex Cohen, Paul Dudek, Brian Miller, Hanno Kaiser, Héctor Armengod, Patrick English, Michelle Carpenter, Ji Liu and Samuel Weiner of Latham & Watkins LLP acted as U.S. legal advisor to Tencent. Zhong Lun Law Firm acted as PRC legal advisor to Tencent. Jo Lit, Barnaby Gowrie and Brett Basdeo of Walkers acted as Cayman Islands legal advisors to Tencent. Goldman Sachs (Asia) L.L.C. acted as financial advisor for Tencent Holdings Limited. Daniel Wolf and Xiaoxi Lin of Kirkland & Ellis acted as legal advisor for Citigroup as financial advisor to the special committee of the Board of Huya Inc. Charles Ching of Weil, Gotshal & Manges acted as legal advisor to Morgan Stanley, financial advisor to the special committee of the board of directors of DouYu International Holdings Limited. Cleary Gottlieb Steen & Hamilton LLP acted as legal advisor to Goldman Sachs (Asia) LLC in the transaction.