China's Tencent Holdings Ltd has agreed to acquire a controlling stake in China Music Corp – a deal that values the firm at $2.7 billion, The Wall Street Journal reported on Thursday.
The internet giant will boost its stake in the country's leading music-streaming company, which owns Kugou and Kuwo, to about 60 percent from 16 percent, the newspaper reports, citing people familiar with the matter.
Tencent, China's biggest social-networking and online-games firm, which also runs its own online music service QQ Music, plans to combine the two entities and create a dominant player in the bourgeoning market, sources said.
The sources say combined music businesses could be valued at around $6 billion after the deal is completed and will operate as a Tencent subsidiary.
Kugou is the largest mobile music service, with a 28 percent market share in China, followed by QQ Music's 15 percent and Kuwo's 13 percent, according to the newspaper, citing data from research firm iiMedia Research.
China Music Corp had been planning an initial public offering in the US, which has now been put on hold. But Tencent could pursue an IPO of the combined company in the future, the newspaper reported, citing one source.
Earlier reports showed Tencent had secured deals with Sony Music Entertainment and Warner Music to become their exclusive online distributor in China.
The country trumps the world by number of mobile-music users, with 449 million in the first quarter, more than the entire population of the US, according to the research firm.