(Reuters) - Tencent Holdings Ltd (HK:0700), the dominant social networking and online entertainment company in China, has agreed to buy 14.6 percent of mobile game developer Glu Mobile Inc (O:GLUU) for $126 million.
Shares of Glu Mobile, which developed Deer Hunter and Kim Kardashian: Hollywood games, rose about 24 percent in extended trading on Wednesday.
Tencent has been aggressive in taking on giants such as Alibaba Group Holding Ltd (N:BABA) and Xiaomi Inc (XTC.UL) in the smart hardware industry.
Tencent launched on Tuesday an operating system for internet-connected devices such as TVs and watches that is open to all developers.
The Chinese company will pay $6 per share for its stake in Glu Mobile, which represents a premium of about 11 percent to the stock's closing price on Wednesday.
Tencent will buy the shares in two tranches: 12.5 million shares on Wednesday followed by a further 8.5 million some time in the second quarter.
Cowen and Co LLC provided a fairness opinion to Glu Mobile's board in connection with the deal.
Glu Mobile's shares were trading at $6.69 after the bell.
(This version of the story adds the background and Glu Mobile results)