Published By : 18 Dec 2017 | Published By : QYRESEARCH
JD.com and Tencent Holdings Ltd. have mutually agreed on investing US$863 million in an online retailer Vipshop Holdings Ltd. This move is expected to set up an alliance between the two major companies in e-commerce and the largest social media enterprise in China.
JD and Tencent are expected to pick up the Class A shares of Vipshop at US$65.40 apiece, similar to the US$13.08 as per the America Depository Share. This information was revealed via an email statement to the press on Monday, December 18, 2017. All this calculates to nearly 55 percent premium over the closed Friday trading of Vipshop. After the deal is concluded, JD and Tencent are projected to own up to 5.5 percent and 7 percent stakes respectively in the overall stock of Vipshop Holdings Ltd.
This alliance combines the power of JD in the field of electronics with the longstanding expertise in the fashion industry of Vipshop. Along with the huge online penetration of Tencent because of its ubiquitous messaging app WeChat, the alliance is expected to make huge margins of revenue. Tenecent, who already holds a considerable stake in JD, has been striving to expand its online logistics network and offerings to match up with the dominance of e-commerce giant, Alibaba Group Holding Ltd.
Richar Liu, the Chairman of JD said in his statement that the company expects to create a strong and clear synergy with the Vipshop keeping in mind their strength flash sales, reach in apparel business along with their exceptional management team. He expects the alliance to create a strong reach in the fashion business and attract more shoppers.