(Yicai Global) Nov. 12 -- After a robust third quarter, China's Douyu International Holding has made another step toward privatization to be able to merge with Huya, and the pair seems bullish about the prospects of what could become the country's largest live-streaming platform.

Douyu has submitted its application documents to the US Securities and Exchange Commission to go private and once approved, it will hold a special shareholder meeting to vote on the matter, a manager at the Wuhan-based company said during an earnings call yesterday.

Two-thirds of the stockholders need to agree on the proposal. If so, the Tencent-backed platform has no schedule yet for the privatization, it added.

On Oct. 12, the two platforms that make up about 80 percent of China's game live-streaming market said that they have agreed to merge. That would mean that Douyu becomes a unit of Huya.

Tencent Holding would have almost 68 percent of the new behemoth's voting power via its affiliates. Part of the plan is that the Shenzhen-based tech firm will integrate its live-streaming business Penguin e-Sports with Douyu for a price of USD500 million. That is expected to happen in the first half of 2021.

The alliance would build on the two firms' strengths in computer and mobile games while integrating management, research and development, as well as information technology frameworks, and lowering costs, Douyu said yesterday.

Huya's leadership agreed on the benefits. Huya feels optimistic about the opportunities presented by a successful merger, Chief Executive Dong Rongjie said during the Guangzhou-based company's earnings call yesterday.

A merger would enable the two firms to achieve synergies by complementing each other’s advantages, according to Dong. It would also create more value for users, business partners and shareholders, he added.

Dong was confident about the pair's advantage over rivals in the broader video sector. Game live-streaming is different from short videos so Kuaishou's influence should not be big, he suggested. Moreover, Bilibili's foray into game live-streaming is largely over, he added.

As short video platforms enter the game live-streaming field, they cultivate more users, which is good, said Douyu. What separates winners from losers is the quality and diversified nature of content and game live-streaming platforms rely on refined and monetized content, the company added.

Doyu's performance improved in the third quarter. Its net profit hit CNY59.6 million (USD9 million), compared with a loss of CNY165.4 million a year ago. The company's revenue rose 37 percent to CNY2.5 billion (USD373 million). It had 194 million average monthly active users.

Huya’s net profit jumped by 75 percent to CNY361 million in the quarter ended September. Its revenue grew by 24 percent to CNY2.8 billion. The average MAU was 173 million.

Douyu's shares [NASDAQ: DOYU] edged up 1.4 percent to USD13.80 yesterday.

Huya's stock price [NYSE: HUYA] rose 3.5 percent to USD20.60.

Editor: Emmi Laine