Youzu Interactive Co., Ltd, a web and mobile game platform in China, will invest CNY538 million to acquire the entire stake in Guangzhou Zhangtao Network Technology Co., Ltd.

According to the report, Youzu will purchase the 100% stake in Zhangtao Technology from ten sellers by paying cash and newly issued shares.

Youzu said that with the transaction, Youzu aims to enhance gaming product promotion capacity of its listed company and save marketing expenses by using Zhangtao Technology's big data services.

Youzu's chairman and general manager Lin Qi reportedly also owned a 20% stake in Zhangtao Technology; therefore, Lin gained CNY100 million from the transaction. This may send red flags to investors who may not consider it an arm's length transaction.