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 The move comes after Bilibili,
which is backed by Chinese technology giants
Tencent Holdings and Alibaba Group Holding,
raised about $2.6 billion in a secondary listing
in Hong Kong last month.
It also comes as Yoozoo, the video game company
that is also known as Youzu Interactive, is
facing management challenges after its chairman
died under suspicious circumstances in December.
A majority of Bilibili's more than 200 million
monthly active users in December were young
people, and it is this customer-base demographic
that the Shanghai-based firm hopes will fuel its
growth in the $44 billion Chinese gaming market.
The gaming industry received a boost last year
after the COVID-19 pandemic forced many
residents to stay at home, driving up game
downloads and boosting the revenues of the
companies. A majority of gaming customers in
China are young.
Bilibili is in talks on the deal with Xu Fenfen,
chairwoman of Yoozoo, said the two people and
another person with direct knowledge of the
matter.
Last month, Bilibili and its founder Chen Rui
submitted to Xu a term sheet - a non-binding
agreement describing the basic terms and
conditions of an investment - said the first two
people.
A 24% stake in Yoozoo is worth about $475
million based on the Shenzhen-listed company's
market capitalisation of $1.98 billion on
Wednesday.
In addition to the stake purchase, Bilibili and
Chen are looking to acquire Yoozoo's
headquarters building in Shanghai and take on
debt of nearly 700 million yuan the company's
late founder Lin Qi left, said the two people.
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 Bilibili, which last week
invested HK$960 million ($123 million) for a
4.72% stake in online game developer X.D.
Network, could team up with some Shanghai-based
state investors to form a consortium for the
deal, they added.
A Bilibili spokeswoman denied it was seeking a
deal with Yoozoo. Yoozoo, which is the developer
of the popular 'Game of Thrones: Winter Is
Coming' game, did not reply to a request for
comment. Another attraction for
Bilibili to team up with Yoozoo is content
opportunities. Yoozoo has sole rights globally
for film and TV adaptations of the Hugo
Award-winning science fiction novel - The
Three-Body Problem.
"It could also bring Bilibili or any other
potential buyers closer to co-developing the IP
rights of Chinese best seller The Three-Body
Problem together with Yoozoo," said one of the
sources.
The deal discussions come against a backdrop of
growing challenges for Yoozoo's Xu, said the
sources. Xu moved into the helm after Lin died
in what local police characterised as suspected
poisoning.
Bilibili rival Kuaishou Technology also held
talks for the stake purchase and The Three-Body
Problem-related co-development. But Kuaishou has
yet to submit a term sheet, said one of the
people and a fourth person with knowledge of the
matter.
Kuaishou did not respond to a request for
comment.
(Reporting by Julie Zhu; Additional reporting by
Pei Li; Editing by Sumeet Chatterjee and
Muralikumar Anantharaman)
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