Tencent to buy 15.68% of Kingsoft

Tencent agreed to buy a 15.68 percent stake in Kingsoft Corp for HK$ 892 million（US$ 115m）and invest US$ 20 million in the Kingsoft’s internet security Subsidiary.

Tencent will buy 111.5 million shares from Mr. Qiu Bojun, chairman and Chief Executive Officer of Kingsoft, and buy another 66.9 million shares from Mr. Zhang Xuanlong, a non-executive director. This purchase will make Tencent the biggest stakeholder of Kingsoft.

Tencent chairman and CEO Ma huateng（aka Pony Ma）said in a Weibo update, “We are very excited to reach a strategic partnership with Kingsoft. This partnership demonstrates our commitment to build a healthy and secure internet environment in China. Kingsoft Internet Security company has been in security business for 14 years, therefore it has operational experience, advanced anti-virus technology and adequate talent pool. Our businesses are highly complementary to each other, so this strategic partnership will provide Chinese internet users with a more reliable online security services and a more secure online experience by combining Kingsoft’s strength in security technologies with Tencent’s in network operations. ”

Honestly, what will Tencent get from this purchase?

Observers believe that Tencent is primarily interested in Kingsoft’s two resources: security technology and MMO games development capability. Currently these two are Tencent’s weak links.