Jagex has been sold to a Chinese company for $300M

Jagex has a new master today.

According to The Financial Times, Shandong Hongda, a company known primarily for its iron ore mining operations, has apparently purchased British games company Jagex for $300 million.

Jagex is known best to MMORPG players for its staggeringly popular MMO RuneScape.

We’ve reached out to Jagex for more information.

Source: The Financial Times, Deal Street Asia. Thanks, Daras!
Update: Jagex issued the following statement to Massively OP:

“Jagex has entered into a non-exclusive, non-binding arrangement for a potential acquisition. The negotiations surrounding the acquisition are ongoing and it remains very much business as usual for the Company.”

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65 Comments on "Jagex has been sold to a Chinese company for $300M"

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emaglaw
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emaglaw

It is a sign of the times. For me, it represents content control by a country that has virtually (no pun) invented cheat codes and content restriction. They still are the largest Communist Country. CNN Jamie Gumbrecht, published an article/report entitled “Boot Camp for The Video Addicted”, April 26, 2016, http://www.cnn.com/2016/04/26/health/cnnphotos-internet-addiction-china-boot-camp/
In that report, the author identifies that the Chinese are placing individuals in centers for mandatory education to cure their video addiction. From 8 years to 30, folks are being locked up for gaming addiction. The reporter omits that this is done without a warrant or hearing.
I say that to say this, the Chinese Government is not our friend.

alaskangoldrush
Guest
alaskangoldrush

The Chinese are buying up game companies for a couple reasons.  First and foremost, it’s to gather information on the people who use it.  Make no mistake, a Communist society works for the government.  Your information will be moved into the great database in the sky.  The Chinese have hacked OPM’s Clearances Database in the US, the Insurance Companies, and so many others. Why?  No clue.  Perhaps they are content with the idea of eventually destroying the global economy that they are also tied in to.  Or perhaps they want that as a “nuclear” option.

Secondly, it’s to make money.

Union Jack
Guest
Union Jack

Looks like we will get some cheap ore then maybe…

Public123
Guest
Public123

Please bring back revision 429 ( August 23, 2006 ) runescape..or whichever revision that the stronghold of security (July 4 2006 ) first came out. Then transfer all gold , stats, items to it. Osrs ( ‘oldschool runescape’ ) isn’t ‘old school’ and many players were disappointed that jagex didn’t come out with the true old school experience…but rather the ‘new school experience.’ If they can do this, they will have corrected this wrong by jagex, and many new players would play again, thus making more money than they currently are. The current ‘osrs’ just doesnt appeal to me as its not old school, but based on a time where I was going to quit because of the updates. Many other players feel the same way. They can then later add the missing skill that the current ‘osrs’ has , hunter..so that players don’t miss out on it. Thanks for reading! =)

FornaForZeTree
Guest
FornaForZeTree

SorenthazSo what you’re saying is…They paid the iron price?

mmonerd
Guest
mmonerd

korsobar Well written.  I would like add another interesting information that will give an idea how overproduction situation in China.   Price of single Iron ore is cheaper than cabbage. Yes Cabbage is more expensive than iron ore.

Grave Knight
Guest
Grave Knight

Weird that how many non-tech Chinese companies are buying game studios.

Murmillo
Guest
Murmillo

Noooooooooooooooooooooooooooooooooooooooo (*Takes deep breath) ooooooooooooooooooooooooooooooooooooo

nathanc1099
Guest
nathanc1099

Just in. Plastic swords will now be the best in the game.

Ket_Viliano
Guest
Ket_Viliano

korsobar  Macro Econ 101 FTW!

Sorenthaz
Guest
Sorenthaz

Afro Thunder Nah these are iron sellers.

Sorenthaz
Guest
Sorenthaz

That’s a lot of Iron Certs.

And now I feel old.

Sorenthaz
Guest
Sorenthaz

breetoplay Zucatti360 korsobar Given they tried to do a Transformers MOBA, I guess it shouldn’t be that surprising that they’re trying to sell out.

Afro Thunder
Guest
Afro Thunder

So that’s what all those Chinese gold sellers have been saving up for!? Master plan… sell gold, buy game to sell more gold!

Tongle
Guest
Tongle

I feel betrayed when a western MMO sells it self or gets bought by the Chinese. The game feels cheapened….Dunno why I feel that way tho.

nothideo
Guest
nothideo

Dystopiq No. RuneScape NXT.

:^)

scratches16
Guest
scratches16

Shandong Hongda, hmm? Well, I guess the dong was hard to say no to… ( ͡° ͜ʖ ͡°)
And with that, I’ve probably filled my daily quota for jokes in poor taste

MesaSage
Guest
MesaSage

korsobar MesaSage Simple answer to a complicated political issue.

korsobar
Guest
korsobar

MesaSage korsobar I was asking a rhetorical question.  The answer is: money.

Dystopiq
Guest
Dystopiq

No. Runescape Next.

MesaSage
Guest
MesaSage

korsobar MesaSage The question is not why does any company sell, but why does THIS company, an online game developer, want to sell to a Chinese company?  That’s the question that begs the answer.

korsobar
Guest
korsobar

MesaSage korsobar  Steel and mining companies in China are expected to lose a very large number of employees. (See e.g. http://www.reuters.com/article/us-china-economy-employment-idUSKCN0W205X).  Shandong Hongda is not losing hundreds of thousands from that company alone.  I mentioned the layoffs to show the stress that the steel/coal/iron industry is under in China.  As the FT article linked above mentions, the iron company Shandong Hongda is losing several times more than the value of Jagex per year.  Many other Chinese companies are distressed with debt at unsustainable levels.  Thanks to ultra-loose monetary policy and the shadow banking system (e.g. peer-to-peer lending and ‘wealth management products’) they can still get more leverage for deals like this.  This sort of deal will hardly save them, but it might allow them to shore up their balance sheet enough to look feasible for a while as they hope for a gov’t bailout.  

As to why Jagex would sell, why does any company sell?

TomTurtle
Guest
TomTurtle

Block N Load already feels monetized fairly well. I would hope it doesn’t get heavy-handed. Though the game’s population feels low, so I also hope it doesn’t shut down either. D:

MesaSage
Guest
MesaSage

korsobar Wait, they’re laying off millions and they’re somehow going to get that back buy putting $300 million into a small online game dev?  That makes no sense whatsoever and misses the underlying reasons for the deal.

breetoplay
Guest
breetoplay

LaurieOliveri That doesn’t contradict Jagex’s statement.

TheKingInYellow
Guest
TheKingInYellow

Captain Electric ManastuUtakata Pandaria.. maybe.

TheKingInYellow
Guest
TheKingInYellow

Ehh.. i looked forward to playing when they release Runescape Next client… but i dont expect anything good from chinese owners.

Polyanna
Guest
Polyanna

Maybe someone finally came up with a mini-game that will allow Chinese gold farmer bots to control IRL ore mining equipment. And you thought actual robots were the reason we all will wind up unemployed. Not even close.

LaurieOliveri
Guest
LaurieOliveri

according to Jagex mods, it hasn’t been done yet..Mod Ronan, posted 2 hours ago on reddit that it is in the early stages of discussion

RagnarTheDrunk
Guest
RagnarTheDrunk

breetoplay Zucatti360 korsobar

breetoplay
Guest
breetoplay

korsobar breetoplay Zucatti360 Yeah, I guess that’s it, but it’s not really like old Jagex. Then again, old Jagex and new Jagex aren’t the same. :/

Captain Electric
Guest
Captain Electric

ManastuUtakata Captain Electric Couldn’t Blizzard buy China at this point?

Nordavind
Guest
Nordavind

SoMuchMass No, you’re mixing titles. It was EverQuest Next, Wildstar is just WIldstar.

korsobar
Guest
korsobar

breetoplay Zucatti360 korsobar It is a privately held company so maybe a very few people just got very rich…

breetoplay
Guest
breetoplay

Zucatti360 korsobar Yeah, I feel like I understand the Chinese perspective here very well. It’s Jagex I don’t get. I am surprised they’d sell.

Zucatti360
Guest
Zucatti360

korsobar China is in the process of getting rid of the one child policy because they dont have enough workers to sustain growth. They are freaking out right now trying to avoid disaster. Its not looking good.

SoMuchMass
Guest
SoMuchMass

Is WildStar next?

korsobar
Guest
korsobar

To give you an idea of how horribly mismanaged Chinese growth has been: the Chinese produced more cement in 2011-2012 than the U.S. did during the entire 20th century.  That is the definition of unsustainable growth and capital misallocation.  Hopefully, when things start to crash, the foreign companies purchased by Chinese companies won’t be liquidated for assets to pay off debt.

KevinSmith11
Guest
KevinSmith11

Feel really bad for the runescape players, hardly anything good ever comes from these types of sales.  The companies don’t care about the games usually only the profits and let it have a bad quarter or 2 and bam close them down.

ManastuUtakata
Guest
ManastuUtakata

Captain Electric 
You can mine Iron in WoW too. Wonder if they’ll try to buy out Blizz/Activision for the access as well? o.O

ProfessionalNoob
Guest
ProfessionalNoob

Damonvile Daybreak 2, Electric Boogaloo?

I’m sure that’s just a myth.

korsobar
Guest
korsobar

Capital is fleeing China in anticipation of future yuan devaluation. Part of China’s ongoing capital flight is expressing itself as M&A deals.  Since China has instituted capital controls to slow the flood of money fleeing yuan-valued holdings, one way for money to leave is for Chinese companies to purchase overseas companies.  I doubt they care one bit about managing the company directly.

Jack Pipsam
Guest
Jack Pipsam

Oh boy, this cannot end well.

Captain Electric
Guest
Captain Electric

Well, can’t you mine ore in Runescape?

¯_(ツ)_/¯

paragonlostinspace
Guest
paragonlostinspace

Damonvile   My betting money is on your second option. :(

JesLyck
Guest
JesLyck

People with Money, want access to a lucrative industry and are prepared to pay for the know-how. Ubisoft’s is also in the process of being acquired by Vivendi in a hostile acquisitions.

paragonlostinspace
Guest
paragonlostinspace

I don’t think this will end well for the players in the long term.

Paraxamos
Guest
Paraxamos

An iron ore company? I took a look around their website and I think that’s very strange. I originally thought they may have been an investement firm like Columbus Nova is, so it may have made some sense to branch out into software developement, but this doesn’t really seem to be the case. 

Very strange indeed.

Zucatti360
Guest
Zucatti360

bummer I really like runescape :(

SallyBowls1
Guest
SallyBowls1

Vivendi Redux? Vivendi was a century old French water company whose CEO wanted more trendy and thus ended up owning Activision-Blizzard.

China’s trade surplus (exports-imports) in January was USD63.29 billion.  So every day a couple of billion dollars goes into China. Just like Japan in the 80s, that capital is going to get spent and some not wisely.  China is the largest gaming market and TenCent is the largest gaming company in the world. 

P.S.: Vivendi is accumulating stock in Ubisoft so their gaming story is not over.

P.P.S.: this is an example of why I shake my head when someone says a gaming company will never do something. A new CEO or CEO vision in your company or an acquiring company and some other entity/people could be making the decisions.

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