Acquisitions

12 Months Ended

Dec. 31, 2022

25.	Acquisitions

Transactions with Chaodian

Prior to 2020, the Group held 63.6% of equity interest in Chaodian. In September 2020, the Company acquired the rest of noncontrolling interests of Chaodian, with the total consideration of RMB744.6 million including with a cash consideration of RMB250.5 million and 1,731,100 Class Z ordinary shares. The consideration was determined by referenced to a third-party valuer’s valuation. The difference between the total consideration and the carrying value of the noncontrolling interest of Chaodian was recognized as additional paid-in capital, amounting to RMB193.3 million. Following the completion of this transaction, the Company held 100% of equity interest in Chaodian.

Transactions with one animation content production company (“Anime Business”)

Prior to 2021, the Group held 8.1% equity share of Anime Business through several investments with preferred rights, which was accounted for as long-term investments using alternative measure method. In January 2021, the Group acquired remaining equity with the total consideration of RMB612.3 million, including the cash consideration of RMB369.1 million and 400,000 restricted Class Z ordinary shares. Upon the completion of this transaction in January 2021, the Group held 100% of equity interests in the Anime Business, which became a consolidated subsidiary of the Group.

The consideration of acquisition of Anime Business was allocated based on their fair value of the assets acquired and the

liabilities

assumed as follows:


	Amount		Amortization Period
	RMB in thousands
Net assets acquired		189,763
Intangible assets
—Brand		85,000		8 years
—Vendor relationship		75,000		10 years
—Non-compete clause		54,000		6 years
Goodwill		283,402

Total		687,165

Total purchase price comprised of:


	Amount
	RMB in thousands
Cash consideration		369,124
Share consideration		243,203
Fair value of previously held equity interests		74,838

Total		687,165

Goodwill arising from this acquisition was attributable to the synergies between ability of animation content production and the Group’s strategy to expand its content library.

Transactions with one Comics distribution company (“Comics Business”)

In November 2021, the Company signed an agreement to acquire all of the equity interests in Comics Business with a total cash consideration of RMB600.0 million. Upon the completion of this transaction, the Group held 100% of equity interests in the Comics Business, which became a consolidated subsidiary of the Group.

The consideration of acquisition of Comics Business was allocated based on their

fair

value of the assets acquired and the liabilities assumed as follows:


	Amount			Amortization Period
	RMB in thousands
Net assets acquired		48,764
Intangible assets
—Brand		23,000			10 years
—User base		11,000			3 years
—Copyrights		269,000			8 years
—Technology		4,000			3 years
—Non-compete clause		5,000			2 years
Deferred tax liabilities		(42,133	)
Goodwill		281,369

Total		600,000

Total purchase price comprised of:


	Amount
	RMB in thousands
Cash consideration		600,000

Goodwill arising from this acquisition was attributable to the synergies between ability of comics distribution and the Group’s strategy to expand its content library.

Transactions with one game development company (“Game Business”)

In February 2022, the Company signed an agreement to acquire all of the equity interests in Game Business with a total cash consideration of RMB 800.0 million. Upon the completion of this transaction, the Group held 100 % of equity interests in the Game Business, which became a consolidated subsidiary of the Group.

The consideration of acquisition of Game Business was allocated

based

on their fair value of the assets acquired and the liabilities assumed as follows:


	Amount			Amortization Period
	RMB in thousands
Net assets acquired		333,830
Intangible assets
—Non-compete clause		111,000			6 years
—Others		50,965			5 years
Deferred tax liabilities		(40,491	)
Goodwill		344,696

Total		800,000

Total purchase price comprised of:


	Amount
	RMB in thousands
Cash consideration		800,000

Goodwill arising from this acquisition was attributable to the Group’s strategy to expand its self-developed capacity in game development.

Other acquisitions

For the years ended December 31

, 2020

, 2021 and 2022

, the Group completed several other acquisitions, to complement its existing businesses and achieve synergies. The acquired entities individually and in aggregate were insignificant. The Group’s other acquisitions are summarized in the following table:


	For the Year Ended December 31,								Amortization Period
	2020			2021		2022

	Amount
	RMB in thousands
Net assets acquired		18,495			28,320		85,369
Intangible assets
—Brand		—			66,000		—			5 years
—Customer relationship		—			83,000		—			5 years
—Non-compete clause		—			28,000		9,000			6 years
—Others		160,636			71,100		61,000			1 to 10 years
Deferred tax liabilities		(49,140	)		—		(17,500	)
Goodwill		283,760			477,746		42,131

Total		413,751			754,166		180,000

Total purchase price comprised of:


	For the Year Ended December 31,
	2020		2021		2022

	Amount

	RMB in thousands
Cash consideration		295,323		244,949		150,000
Share consideration		118,428		391,244		—
Fair value of previously held equity interests		—		117,973		30,000

Total		413,751		754,166		180,000

Pro forma results of operations for all the acquisitions have not been presented because they were not material to the consolidated statements of operations and comprehensive loss for the years ended December 31, 2020, 2021 and 2022, either individually or in aggregate.