JD.com, one of China’s top B2C e-commerce companies, has formed a strategic partnership with China’s largest internet company Tencent Holdings Ltd to further grow the e-commerce business in the country, according to a news release on Monday.
The strategic partnership enables JD to tap Tencent’s significant mobile and internet user base, and Tencent to leverage JD’s ecommerce services to offer superior user experiences. JD will become Tencent’s preferred partner for all physical goods ecommerce businesses. Martin Lau, President of Tencent, will join JD’s Board of Directors. The transaction represents a landmark strategic partnership in the large and fast growing ecommerce, mobile and Internet industries in China.
As part of the transaction, JD will acquire 100 percent interests in Tencent’s QQ Wanggou B2C and PaiPai C2C marketplace businesses, logistics personnel and assets, a minority stake in Yixun, and will enter into a strategic cooperation agreement with Tencent. In addition, JD has the right to acquire the remaining stake of Yixun in future.
As part of the strategic cooperation, Tencent will support JD’s growth in the physical goods ecommerce business by offering level one access points in Weixin and Mobile QQ, and support from other key platforms to JD. Both parties will also cooperate on online payment services to improve users’ online shopping experience.
In connection with the transaction, JD will issue new shares to Tencent. Initially, Tencent will hold approximately 15 percent in JD upon closing of the transaction. Furthermore, Tencent will subscribe at IPO price for an additional 5 percent of JD on a post-IPO basis. The IPO subscription is expected to close concurrently with JD’s IPO.
"Through this strategic partnership with Tencent in key areas, such as mobile access points, traffic support and ecommerce activities, we hope to enhance our ability to provide high quality and enjoyable shopping experience to a broader and growing user base while strengthening our direct sales and marketplace businesses on mobile and internet," said Richard Liu, founder, Chairman and CEO of JD.com Inc.
"We are pleased to combine our thriving and fast growing ecommerce initiative with JD’s in this strategic partnership, and support them to further grow and provide even better ecommerce services to our collective users. Our strategic partnership with JD will not only extend our presence in the fast-growing physical goods ecommerce market, but also allow us to better develop our enabling services such as payment, public accounts and performance-based advertising network to create a more prosperous ecosystem for overall ecommerce activities on our platforms," said Martin Lau, President of Tencent.