Esports and poker operator Allied Gaming & Entertainment has acquired a majority stake in mobile games developer Beijing Lianzhong Zhihe Technology Co.
Under the agreement, Allied will pay approximately $7.0m (£5.5m/€6.4m) to acquire the shares from Ourgame International Holdings. Allied will also take a majority stake in the developer’s board.
The deal remains subject to certain closing conditions but is expected to close by the end of September.
Founded in April 2022 in Beijing, China, Zhihe mainly develops card and mahjong casual games. In the first nine months of operation in fiscal 2022, Zhihe generated revenue of $10.0 million.
“We are pleased to announce our strategic investment in Beijing Lianzhong Zhihe Technology Co.,” said Yinghua Chen, CEO of Allied. “In just over a year, Zhihe has made remarkable progress in the expansive mobile gaming market, which will align seamlessly with our strategic goals and the establishment of our subsidiary Allied Mobile Entertainment (AME).
“Zhihe brings a compelling library of popular mobile games that will bring significant traction to AME, while also providing distribution channels for our current portfolio of casual mobile games that are in testing and pre-release.
“We look forward to working with their leadership team to drive future value and leverage the synergies of our businesses.”
Broader growth plans at Allied
The announcement comes after Allied reported its second quarter and first half results earlier this week.
Revenue was $3.3 million in the three months ended June 30, up 182.3% from $1.2 million a year earlier. In the first half of the year, sales rose by 25.0% to $4.5 million.
After the results were released, Chen talked about the potential for further growth, citing a major restructuring of the company late last year.
Details were announced in December 2022, including the restructuring of the existing e-sports business. Allied also expanded its focus to include a broader range of entertainment and gaming products and services.
The initiative included the creation of two new subsidiaries in AME and Allied Experiential Entertainment (AEE). AME focuses on the mobile gaming market, while AEE is active in entertainment live events, experiential entertainment venue operations, management and consulting.
Additionally, the company rebranded from Allied Esports Entertainment to reflect its new direction. The second quarter was the second full quarter since the restructuring.