Halted Acquisition by Tencent May Underpin Layoffs at Gaming Phone Firm Black Shark
On October 10, STAR Market Daily learned from several independent sources that Black Shark, a Chinese gaming smartphone brand, has recently been significantly shrinking its number of employees, with layoffs involving various departments and reaching a rate of nearly 50%. Individuals familiar with the situation said that Tencent‘s acquisition plan for Black Shark has run aground, which may be a major reason for the recent staff cuts. Regarding the matter, Black Shark CEO Harrison Luo said “no comment.”
In this round of layoffs, the VR project team has been affected most, with a large number of employees recruited at the beginning of the year having now been laid off. Posts still in probationary periods have also been cancelled in one fell swoop.
In addition, regarding the halted acquisition, a web user broke news on social media that Tencent had invested hundreds of millions of yuan in the development of Black Shark’s VR business, but some of the latter’s senior executives dealt with the funds in a corrupt manner, leading to acquisition’s cancellation. Black Shark insiders responded, claiming that this news was false. To counteract these rumors, they said the firm will take legal measures to defend its reputation. They added that Black Shark and Tencent are still engaged in investment cooperation.
Founded in 2017, Black Shark focuses on gaming smartphones, and has released such a device in cooperation with Tencent Games in 2020. According to the firm’s official website, it has many smartphones such as Black Shark 5 Pro, as well as related products such as phone heat dissipation cooling fan back clips, game headsets and game controllers.
In early January of this year, it was reported that Tencent planned to acquire Black Shark. This action was regarded by the outside world as Tencent‘s step towards the emerging metaverse industry. If the transaction is completed, the business focus of Black Shark will shift from game smartphones to VR devices. Tencent will provide content, and Black Shark will provide VR device entrance. At that time, several recruitment websites showed that the company had expressed interest in hiring VR/AR talent.
SEE ALSO: Tencent Reportedly Gives Up Acquisition of Black Shark
On May 12, the acquisition was reversed. A report quoted individuals familiar with the matter as saying that Tencent had given up its acquisition of Black Shark. CEO Harrison Luo even said on the matter that “there is nothing,” adding that Black Shark still has financing and acquisition related plans. “We are looking – opportunities need to be found,” he said. Regarding acquisition rumors, Tencent sources said “no comment.”
According to public information, the most recent financing for Black Shark took place in April 2018, and the investors were Xiaomi Technology and Nanchang Jinkai Group under Nanchang Economic Development Zone. At present, the major shareholder of Black Shark is Tianjin Jinxing Investment Co., Ltd., with a shareholding ratio of about 46.4%, and the latter is wholly owned by Xiaomi.