Asian Tech Press (Jan 10) -- Chinese gaming and social media company Tencent Holdings Ltd will acquire gaming phone company Black Shark, a key step in its foray into the metaverse industry, Chinese media outlet 36Kr reported exclusively on Monday.

Te hardware maker, which focuses on gaming phones, will also see its business transformed after the acquisition, the report said. Black Shark's future business focus will shift from gaming phones to the VR devices, where Tencent will provide the content and it will provide the VR hardware portal.

In addition, after the acquisition is completed, Black Shark as a whole will be integrated into Tencent's Platform & Content Group (PCG). And Tencent will take this as a key step into the metaverse industry.

36Kr also said that the acquisition has also been approved by the senior management of Xiaomi, the major shareholder of Black Shark.

Public information shows that Black Shark was established in 2017, co-funded by a Xiaomi subsidiary and a Chinese state-owned enterprise. Currently, a wholly-owned subsidiary of Xiaomi is the majority shareholder holding 46.4% of Black Shark.

The co-founder and current CEO of Black Shark, Luo Yuzhou, was the vice president of consumer business for Huawei in China.

"Black Shark has a valuation of 3 billion yuan ($471 million), but Tencent has cut it to about 2.6-2.7 billion yuan ($408-424 million)," a source said.

In response to the acquisition, Tencent said it would not comment.

(US$1 = 6.3726 yuan)