China's Internet conglomerate Tencent Holdings is set to become a majority stakeholder in one of China's leading music streaming companies, a move that will make Tencent a dominant player in China's lucrative music streaming industry.        

Tencent Holdings is set to increase its stake in China Music Corporation (CMC) from 16 percent to about 60 percent, the Wall Street Journal reported citing inside sources.

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According to Chinese media, the deal would be an all cash transaction. CMC has been valued at roughly $2.7 billion.

After the deal is completed, Tencent plans to merge its music streaming company QQ Music with two streaming services owned by CMC - Kugou and Kuwo. Both companies have a dominant share in China's music streaming market. According to data provided by iiMedia Research, Kugou has a 28 percent market share while Kuwo control 13 percent of the market.

This merger will make Tencent a leader in China's online-music market, which over the years has increased sporadically due to a rise in the sale of smartphones. Industry experts estimate that the combined market valuation of these three music streaming companies will be around $ 6 billion.

According to the Wall Street Journal, CMC was initially planning to make an initial public offering (IPO) in the U.S market to raise capital. However, that plan has now been shelved. Sources claim that Tencent may make an IPO of the newly combined company in the near future.

CMC's acquisition is very much likely to give Tencent a much-needed edge in the competitive online entertainment market.

TagsTencent Holdings, China Music Corporation, Tencent acquisition, china