Tencent is giving away $16 billion of its stake in JD.com
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Currently, Tencent controls 17% of JD.com. After the distribution, its stake will drop to to 2.3%, which means it will no longer be JD.com’s largest shareholder.
This surprising retreat by Tencent comes at a time when the country’s internet giants are under intense pressure from Beijing.
In its filing on Thursday, Tencent said that JD.com has reached a status where it can finance its own growth.
It is, therefore, “an appropriate time” to transfer the majority of the stake to its shareholders, Tencent said.
The move may reduce Tencent’s “dominance” in the market and “is potentially an attempt to shift towards fairer competition, as well as to be more in line with the agenda for China authorities,” said Yeap Jun Rong, market strategist for IG, in a research note on Thursday.
As part of the deal, Tencent President Martin Lau will step down as a director of JD.com, according to the filing.
The two companies will “continue to maintain their mutually beneficial business relationship,” including their ongoing strategic partnership agreement, Tencent and JD.com said in separate statements on Thursday.
Tencent’s stock surged more than 4% in Hong Kong on Thursday, while JD.com’s shares tumbled 7%.
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