Tencent (TCEHY) plans to distribute greater than $16 billion price of its stake in JD.com (JD) to its shareholders as a one-time dividend, the Chinese gaming and social media large stated Thursday in a inventory alternate submitting. The 457 million shares that Tencent plans to provide out symbolize 86.4% of its stake at JD.com, or 14.7% of JD.com’s complete issued shares.
Currently, Tencent controls 17% of JD.com. After the distribution, its stake will drop to to 2.3%, which implies it’ll now not be JD.com’s largest shareholder.
JD.com founder Richard Liu Qiangdong, who holds 13.9% of shares, will change into the largest stakeholder, in keeping with the corporate’s newest annual report. Walmart (WMT) follows, with a 9.3% stake.
This stunning retreat by Tencent comes at a time when the nation’s web giants are below intense strain from Beijing.
For the previous yr, China has elevated scrutiny of the tech business, printed detailed guidelines geared toward tackling unfair competitors, slapped firms with large fines, and demanded that some corporations utterly overhaul their companies.
In its submitting on Thursday, Tencent stated that JD.com has reached a standing the place it might probably finance its personal progress.
It is, due to this fact, “an acceptable time” to switch nearly all of the stake to its shareholders, Tencent stated.
The transfer could scale back Tencent’s “dominance” out there and “is doubtlessly an try to shift in direction of fairer competitors, in addition to to be extra in step with the agenda for China authorities,” stated Yeap Jun Rong, market strategist for IG, in a analysis word on Thursday.
As a part of the deal, Tencent President Martin Lau will step down as a director of JD.com, in keeping with the submitting.
The two firms will “proceed to keep up their mutually helpful enterprise relationship,” together with their ongoing strategic partnership settlement, Tencent and JD.com stated in separate statements on Thursday.
Tencent’s inventory surged greater than 4% in Hong Kong on Thursday, whereas JD.com’s shares tumbled 7%.
