HONG KONG â€" Tencent, one of China’s biggest Internet companies, said on Monday that it would pay $215 million for a 15 percent stake in the Chinese e-commerce company JD.com.
The deal also calls for Tencent to buy an additional 5 percent stake in JD.com after JD.Com’s planned $1.5 billion listing on the Nasdaq is completed, and for the two companies to cooperate in China’s fast-growing and highly competitive e-commerce business.
JD.com, formerly known as 360buy.com, is the second biggest e-commerce company in China, after the much larger Alibaba Group, which operates the Taobao.com and Tmall.com shopping sites. Tencent, with a market value of about $150 billion, is one of the world’s biggest Internet companies and operates Weixin, or WeChat, a popular messaging service similar to WhatsApp.
By joining forces, Tencent and JD.com are seeking to challenge Alibaba’s dominant position in handling the bulk of online purchases made by China’s rising consumer class.
JD.com’s initial public offering is expected to be one of the biggest Chinese listings of the year in the United States. Alibaba, for its part, is also expected to seek a listing this year in a deal that would be many times as large as JD.com’s and that analysts expect would eclipse Facebook’s $16 billion I.P.O. in 2012.
In an announcement to the Hong Kong stock exchange, Tencent said the tie-up with JD.com would help to “extend the company’s presence in the fast-growing physical goods e-commerce market and to achieve economies of scale.â€
Under the terms of the deal, Tencent can appoint one member to JD.com’s board of directors and is restricted in selling its stake for three years. The strategic partnership between the two companies in the e-commerce business, which will also focus on payment solutions, is for an initial term of five years.
Bank of America Merrill Lynch and China Renaissance acted as financial advisers to JD.com on the deal, while Tencent was advised by Barclays Bank.
