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Published: 15:59, August 16, 2022 | Updated: 20:34, August 16, 2022
Tencent 'plans to divest US$24b Meituan stake'
By Agencies
Published:15:59, August 16, 2022 Updated:20:34, August 16, 2022 By Agencies

In this undated file photo, a deliveryman for Meituan, the country's on-demand service platform, delivers food in Beijing. (PHOTO PROVIDED TO CHINADAILY.COM.CN)

HONG KONG - The Chinese mainland's Tencent Holdings plans to sell all or a bulk of its US$24 billion stake in food delivery firm Meituan to monetize an eight-year-old investment, four sources with knowledge of the matter said.

Tencent, which owns 17 percent of Meituan, has been engaging with financial advisers in recent months to work out how to execute a potentially large sale of its Meituan stake, said three of the sources.

Tencent, which owns 17 percent of Meituan, has been engaging with financial advisers in recent months to work out how to execute a potentially large sale of its Meituan stake, three sources said

Technology giant Tencent, the owner of the mainland's No. 1 messaging app WeChat, first invested in Meituan's rival Dianping in 2014, which then merged with Meituan a year later to form the current company.

Based on Meituan's market capitalization as of Monday, Tencent's 17 percent stake is worth US$24.3 billion.

Tencent is seeking to kick off the sale within this year if market conditions are favorable, said two of the sources.

ALSO READ: Meituan eyes mapping, driverless vehicles to cut delivery costs

Shares of Hong Kong Special Administrative Region-listed Meituan fell more than 10 percent following the Reuters report while Tencent dropped more than 2 percent in Tuesday afternoon trade before recovering to be up 1 percent. 

Tencent declined to comment. Meituan did not respond to a request for comment.

All the sources declined to be named due to confidentiality constraints.

Tencent announced in December the divestment of around 86 percent of its stake in JD.com Inc, worth US$16.4 billion, weakening its ties to the mainland's second-biggest e-commerce firm.

One month later, it raised US$3 billion by selling a 2.6 percent stake in Singapore-based gaming and e-commerce company SEA Ltd, which was seen as a move to monetize its investment while adjusting business strategy. 

READ MORE: Meituan surges to highest since IPO after surprise profit

The potential sale of the Meituan holding will likely be executed via a block trade in the public market which typically takes a day or two from marketing to completion, according to two of the sources.

It would be a fast and smooth way for Tencent to offload the shares, they added, compared to negotiating with a private buyer.


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