Tencent Holdings Ltd., Asia’s largest Internet company, has agreed to pay $500 million for a 28 percent stake in South Korean mobile gaming firm CJ Games. As part of the deal, Tencent said that CJ Games will acquire online and mobile game portal Netmarble.

Martin Lau, Tencent’s president, said in a press release that the deal provides benefits for both sides, as Tencent will gain exposure to the South Korean gaming industry as well as “CJ Games’ unrivalled game development skills.” CJ Games will gain access to the Chinese market and Tencent’s “strong operation capabilities.”

News of the acquisition comes as competition is heating up between Tencent and its main rival Alibaba Group Holdings Ltd., which in mid-March announced plans for a $15 billion US initial public offering. Tencent and Alibaba spent $3.1 billion and $3.5 billion respectively on investments in 2013. To challenge Alibaba in the e-commerce market, Tencent purchased a 15 percent stake in online retailer JD.com on March 9.  Alibaba responded by investing $280 million in mobile messaging app-maker Tango to challenge Tencent’s popular WeChat app.

Posted by Catherine Matacic