Interviews
Tencent, JD.com and Vipshop decide to cooperate
23 Dec '17
4 min read
Courtesy: Tencent
Tencent, a leading provider of internet value-added services in China, and JD.com, China’s largest retailer, have signed definitive agreements with Vipshop, a leading online discount retailer for brands in China, under which Tencent and JD.com will together invest approximately US$863 million in cash in Vipshop at the closing of the transaction.
Pursuant to the share subscription agreement, Tencent and JD.com will subscribe for newly issued Class A ordinary shares of Vipshop in the amount of approximately US$604 million and approximately US$259 million, respectively. The purchase price will be US$65.40 per Class A ordinary share, which is equivalent to US$13.08 per American Depositary Share (“ADS”) of Vipshop, five of which represent one Class A ordinary share. The purchase price represents a 55 per cent premium over the closing price of the ADSs as of the last trading day on December 15, 2017.
The transaction is expected to close in the near future, subject to customary closing conditions. Upon the closing, Tencent and JD.com will beneficially own, taking into account any existing holding, approximately 7 per cent and 5.5 per cent, respectively, of Vipshop’s total issued shares. The Class A ordinary shares issued to Tencent and JD.com will be subject to a two-year lock up restriction. Tencent and JD.com will have the right to appoint a director and an observer, respectively, to Vipshop’s board of directors during the two-year lockup period. After the end of the lock-up period, for so long as Tencent and JD.com hold approximately 12 per cent and 8 per cent, respectively, of Vipshop’s total issued shares, or otherwise by mutual agreement with Vipshop, they will maintain director and board observer rights.
Concurrently with the entry of the share subscription agreement, Tencent and JD.com have entered into business cooperation agreements with Vipshop, effective upon closing, establishing a cooperative relationship among Tencent, JD.com and Vipshop. Under these agreements, Tencent will grant Vipshop an entry on the interface of Weixin Wallet enabling Vipshop to utilise traffic from Tencent’s Weixin platform, and JD.com will grant Vipshop entries on both the main page of JD.com’s mobile application and the main page of its Weixin Discovery shopping entry, and will assist Vipshop in achieving certain GMV targets through JD.com’s platform.
“I am truly delighted about Vipshop's new strategic cooperation relationships with Tencent and JD.com,” said Eric Ya Shen, Vipshop’s co-founder, chairman of the board of directors and chief executive officer. “This undoubtedly is an important event for Vipshop as well as China's e-commerce and internet industries. We, together with Tencent and JD.com, will leverage our respective strengths to form a strategic cooperative alliance aiming to achieve a deep, win-win cooperation and to benefit internet users and consumers. We will develop a holistic cooperation with Tencent on the Weixin platform and expand our strategic alliance with Tencent into more and broader areas. We will explore win-win opportunities in multiple areas with JD.com, including establishing a strategic alliance in collaboration with brand suppliers, and an on-line traffic alliance.”
“The strength of Vipshop’s flash sale and apparel businesses, as well as its outstanding management team, create clear and strong synergies with us,” said Richard Liu, chairman and CEO of JD.com. “This partnership will further extend the strong inroads that we have made with female shoppers, and will expand the breadth and reach of our fashion business. We continue to add the top-notch partners to complement JD.com’s core strengths, ensuring that JD and our partners provide the best customer experience for every shopping need.”
Martin Lau, president of Tencent Holdings, said, “We are pleased to become strategic investor in and partner with Vipshop. We look forward to providing Vipshop with our audiences, marketing solutions, and payment support to help the company provide branded apparel and other product categories to China’s rising middle class. We already see substantial demand from our users to discover, discuss and purchase branded apparel in our applications, and we believe that connecting our users more deeply to products on Vipshop’s platform will enrich their online experiences while benefiting Vipshop.” (SV)
Pursuant to the share subscription agreement, Tencent and JD.com will subscribe for newly issued Class A ordinary shares of Vipshop in the amount of approximately US$604 million and approximately US$259 million, respectively. The purchase price will be US$65.40 per Class A ordinary share, which is equivalent to US$13.08 per American Depositary Share (“ADS”) of Vipshop, five of which represent one Class A ordinary share. The purchase price represents a 55 per cent premium over the closing price of the ADSs as of the last trading day on December 15, 2017.
The transaction is expected to close in the near future, subject to customary closing conditions. Upon the closing, Tencent and JD.com will beneficially own, taking into account any existing holding, approximately 7 per cent and 5.5 per cent, respectively, of Vipshop’s total issued shares. The Class A ordinary shares issued to Tencent and JD.com will be subject to a two-year lock up restriction. Tencent and JD.com will have the right to appoint a director and an observer, respectively, to Vipshop’s board of directors during the two-year lockup period. After the end of the lock-up period, for so long as Tencent and JD.com hold approximately 12 per cent and 8 per cent, respectively, of Vipshop’s total issued shares, or otherwise by mutual agreement with Vipshop, they will maintain director and board observer rights.
Concurrently with the entry of the share subscription agreement, Tencent and JD.com have entered into business cooperation agreements with Vipshop, effective upon closing, establishing a cooperative relationship among Tencent, JD.com and Vipshop. Under these agreements, Tencent will grant Vipshop an entry on the interface of Weixin Wallet enabling Vipshop to utilise traffic from Tencent’s Weixin platform, and JD.com will grant Vipshop entries on both the main page of JD.com’s mobile application and the main page of its Weixin Discovery shopping entry, and will assist Vipshop in achieving certain GMV targets through JD.com’s platform.
“I am truly delighted about Vipshop's new strategic cooperation relationships with Tencent and JD.com,” said Eric Ya Shen, Vipshop’s co-founder, chairman of the board of directors and chief executive officer. “This undoubtedly is an important event for Vipshop as well as China's e-commerce and internet industries. We, together with Tencent and JD.com, will leverage our respective strengths to form a strategic cooperative alliance aiming to achieve a deep, win-win cooperation and to benefit internet users and consumers. We will develop a holistic cooperation with Tencent on the Weixin platform and expand our strategic alliance with Tencent into more and broader areas. We will explore win-win opportunities in multiple areas with JD.com, including establishing a strategic alliance in collaboration with brand suppliers, and an on-line traffic alliance.”
“The strength of Vipshop’s flash sale and apparel businesses, as well as its outstanding management team, create clear and strong synergies with us,” said Richard Liu, chairman and CEO of JD.com. “This partnership will further extend the strong inroads that we have made with female shoppers, and will expand the breadth and reach of our fashion business. We continue to add the top-notch partners to complement JD.com’s core strengths, ensuring that JD and our partners provide the best customer experience for every shopping need.”
Martin Lau, president of Tencent Holdings, said, “We are pleased to become strategic investor in and partner with Vipshop. We look forward to providing Vipshop with our audiences, marketing solutions, and payment support to help the company provide branded apparel and other product categories to China’s rising middle class. We already see substantial demand from our users to discover, discuss and purchase branded apparel in our applications, and we believe that connecting our users more deeply to products on Vipshop’s platform will enrich their online experiences while benefiting Vipshop.” (SV)
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