Tencent plans to divest Meituan stake worth $24 billion | The Business Standard
Skip to main content
  • Home
  • Economy
    • Aviation
    • Banking
    • Bazaar
    • Budget
    • Industry
    • NBR
    • RMG
    • Corporates
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
    • Book Review
    • Brands
    • Earth
    • Explorer
    • Food
    • Habitat
    • In Focus
    • Luxury
    • Mode
    • Panorama
    • Pursuit
    • Wheels
  • Epaper
    • GOVT. Ad
  • More
    • Subscribe
    • Videos
    • TBS Graduates
    • Thoughts
    • Splash
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • COVID-19
    • Long Read
    • Interviews
    • Offbeat
    • Tech
    • Magazine
  • বাংলা
The Business Standard

Monday
December 04, 2023

Sign In
Subscribe
  • Home
  • Economy
    • Aviation
    • Banking
    • Bazaar
    • Budget
    • Industry
    • NBR
    • RMG
    • Corporates
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
    • Book Review
    • Brands
    • Earth
    • Explorer
    • Food
    • Habitat
    • In Focus
    • Luxury
    • Mode
    • Panorama
    • Pursuit
    • Wheels
  • Epaper
    • GOVT. Ad
  • More
    • Subscribe
    • Videos
    • TBS Graduates
    • Thoughts
    • Splash
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • COVID-19
    • Long Read
    • Interviews
    • Offbeat
    • Tech
    • Magazine
  • বাংলা
MONDAY, DECEMBER 04, 2023
Tencent plans to divest Meituan stake worth $24 billion

China

Reuters
16 August, 2022, 04:50 pm
Last modified: 16 August, 2022, 04:54 pm

Related News

  • Decoding China: EU, China headed for challenging summit
  • What do we know about China’s respiratory illness surge?
  • US proposes EV Tax credit rules to curb Chinese inputs
  • What is White Lung Syndrome? Mysterious pneumonia fast striking children
  • Meta dismantles China-based network of thousands of fake accounts

Tencent plans to divest Meituan stake worth $24 billion

Reuters
16 August, 2022, 04:50 pm
Last modified: 16 August, 2022, 04:54 pm
Tencent plans to divest Meituan stake worth $24 billion
  • Tencent seeks to kick off Meituan stake sale this year-sources
  • Sale seeks to placate regulators, monetise 8-year-old bet-sources
  • Stake sale likely to be done as a block trade - sources
  • Move comes after Tencent's divestments of JD.com, SEA stakes
  • Meituan shares sink 10%; Tencent shares recover

China's Tencent Holdings plans to sell all or a bulk of its $24 billion stake in food delivery firm Meituan to placate domestic regulators and monetise an eight-year-old investment, four sources with knowledge of the matter said.

Tencent, which owns 17% 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.

The planned sale comes against the backdrop of China's sweeping regulatory crackdown since late 2020 on technology heavyweights that took aim at their empire building via stake acquisitions and domestic concentration of market power.

The Business Standard Google News Keep updated, follow The Business Standard's Google news channel

That crackdown, which has led to billions of dollars in fines for the Chinese tech giants, is reshaping the companies by forcing them to make multi-billion dollar divestments. Tencent, for instance, is exiting a clutch of businesses now and pivoting towards the global gaming market.

The owner of China'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 capitalisation as of Monday, Tencent's 17% stake is worth $24.3 billion.

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

It has been reducing holdings in portfolio companies partly to appease the Chinese regulators and partly to book hefty profits on those bets, said three of the sources. The value of its shareholdings in listed companies excluding its subsidiaries dropped to just $89 billion as of end-March from $201 billion in the same period last year, according to its quarterly reports.

"The regulators are apparently not happy that tech giants like Tencent have invested in and even become a big backer of various tech firms that run businesses closely related to people's livelihoods in the country," said one of the sources.

Shares of Hong Kong-listed Meituan fell more than 10%, the biggest daily percentage decline in five months, following the Reuters report. Tencent shares dropped more than 2% in Tuesday afternoon trade before recovering to be up 1%.

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% of its stake in JD.com Inc, worth $16.4 billion, weakening its ties to China's second-biggest e-commerce firm. 

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

Tencent has not pinned the divestment of JD.com and SEA stakes on the regulatory crackdown.

The 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.

The planned Meituan stake sale via block trade would be sizeable, and come after Netherlands-based technology investor Prosus' sale of 2% of Tencent stake last year for $14.7 billion that counted as the world's largest block trade.

The block trade would be a fast and smooth way for Tencent to offload the shares, they added, compared to distributing them as dividends or negotiating with a private buyer.

REGULATORY DIRECTION
The regulatory crackdown in China came after years of a laissez-faire approach that drove growth and dealmaking at breakneck speed.

To fall in line, Tencent has made divestments in portfolio companies a focus for its deals team this year and next year, said one of the sources.

Analysts had expected Tencent to divest stakes in other portfolio companies after its divestment of JD.com and SEA shares.

Citi analysts said in a report in January they believed Tencent would further evaluate and reallocate funding from more established investments to newer technology ventures to ride on the industrial internet growth opportunity and to align with its social sustainability initiatives.

Besides Meituan, Tencent also holds stakes in e-commerce company Pinduoduo Inc, video platform Kuaishou, ride-hailing champion Didi, automaker Tesla and streaming service Spotify.

The crackdown has heaped pain on Tencent as it has on others.

Tencent reported in May its quarterly profit halved from a year ago and revenues stagnated, blaming cuts in advertising spending by consumer, e-commerce and travel businesses for its worst performance since it went public in 2004. 

Last month, China's market regulator imposed the latest fines on Tencent and Alibaba as well as a range of other firms for failing to comply with anti-monopoly rules on the disclosure of transactions. 

The regulator also blocked Tencent's proposed $5.3 billion merger of the country's top two videogame streaming sites DouYu and Huya last year on antitrust grounds.

World+Biz

China / Tencent

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • For the first time, Bangladesh seeks foreign loans to support Rohingyas
    For the first time, Bangladesh seeks foreign loans to support Rohingyas
  • Treasury bill interest rate tops 11%
    Treasury bill interest rate tops 11%
  • File Photo of Prime Minister Sheikh Hasina
    PM to hold meeting with leaders of 14-party alliance tomorrow

MOST VIEWED

  • Representative image
    5.5 magnitude earthquake jolts Dhaka, parts of country
  • Cox's Bazar Express started its first journey from Cox's Bazar to Dhaka at 12:40pm on Friday (1 December). Photo: Nupa Alam
    Man crushed by Cox's Bazar Express on debut journey
  • Representative image
    BCS admin cadres' organisation forays into luxury hotel business
  • Will Bangladeshi garment exporters be able to meet EU's upcoming standards?
    Will Bangladeshi garment exporters be able to meet EU's upcoming standards?
  • 5 renewable power projects on cards to counter global fuel price surge
    5 renewable power projects on cards to counter global fuel price surge
  • Collage of the Android Earthquake Alerts System screenshots posted on the social media on Saturday, 2 December 2023
    Here’s how your Android phone alerts you of an earthquake

Related News

  • Decoding China: EU, China headed for challenging summit
  • What do we know about China’s respiratory illness surge?
  • US proposes EV Tax credit rules to curb Chinese inputs
  • What is White Lung Syndrome? Mysterious pneumonia fast striking children
  • Meta dismantles China-based network of thousands of fake accounts

Features

Designed for utility, the D90 is a giant in comparison to other MG models and misses out on design elements which gives the other models their sporty stance. Photo: Akif Hamid

Maxus D90: Spacious, capable and practical

11h | Wheels
Maria Callas: Remembering the soprano diva on her century

Maria Callas: Remembering the soprano diva on her century

10h | Features
Photo: Touseful Islam

Last sip of coffee with cats: Bidding adieu to Capawcino

12h | Features
Jannatul Ferdous Ivy has written 11 books so far with the latest, a series of poems, being published this year. Photo: Noor-A-Alam

Jannatul Ferdous Ivy: Overcoming tragedy, excelling in life

20h | Panorama

More Videos from TBS

Euro champion Italy in 'Group of Death' with Spain and Croatia

Euro champion Italy in 'Group of Death' with Spain and Croatia

7h | TBS SPORTS
Will Israel kill expatriate Hamas leaders after the war?

Will Israel kill expatriate Hamas leaders after the war?

6h | TBS World
Mahiya Mahi, Dolly Sayantani and Hero Alam's candidacy canceled!

Mahiya Mahi, Dolly Sayantani and Hero Alam's candidacy canceled!

10h | TBS Stories
Doctors of bike engines

Doctors of bike engines

8h | TBS Stories
EMAIL US
[email protected]
FOLLOW US
WHATSAPP
+880 1847416158
The Business Standard
  • About Us
  • Contact us
  • Sitemap
  • Privacy Policy
  • Comment Policy
Copyright © 2023
The Business Standard All rights reserved
Technical Partner: RSI Lab

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - [email protected]

For advertisement- [email protected]