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Tencent Holdings Ltd (HKG:0700) to Buy Stake in 58.com Inc (ADR)(NYSE:WUBA)

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By on Technology & Software

Tencent Holdings Ltd (HKG:0700), a provider of internet services in China, will pay $736 million in exchange for an equity interest of about 19.9% in 58.com Inc (ADR)(NYSE:WUBA), a Chinese online marketplace, the two companies said. 

Tencent has agreed to purchase 36,805,000 Class A and B ordinary shares at a purchase price of $20 per ordinary share, corresponding to $40 per American Depositary Share, each representing two ordinary shares.

In addition, 58.com will use part of the proceeds from the transaction to repurchase 27,603,750 ordinary shares from existing pre-IPO shareholders. 

58.com said it would solidify its position in local services by capturing traffic from Tencent’s online properties such as QQ, Weixin, QQ.com, and QQ browser. The company said that integrating 58.com’s services into these properties would expand 58.com’s user base, improve the user experience and help users improve the level of communication between each other and with merchants. 

Shares in 58.com were down 0.94% to $51.73 on Friday morning. The company’s shares have traded between $58.89 and $21 over the past 52 weeks.

 

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