Tencent and JD.com Invest $863 Million in Online Discount Retailer Vipshop

Tiffany Ap

Updated Mon, December 18, 2017 at 5:04 AM UTC

HONG KONG–WeChat owner Tencent Holdings and JD.com are to invest $863 million in flash sales site Vipshop Holdings, a major tie-up between China’s most powerful social network and two of its important ecommerce players.

Tencent and JD.com will subscribe for newly issued Class A ordinary shares of Vipshop in the amount of approximately $604 million and approximately $259 million, respectively, resulting in ownership of 7 percent and 5.5 percent of Vipshop’s total issued shares.

The purchase price will be $65.40 per Class A ordinary share, equivalent to $13.08 per American Depositary Share (ADS), of Vipshop, a 55 percent premium over the closing price of the ADS on Dec. 15.

“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 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 [also known as WeChat] 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. We will continue to operate as an independent e-commerce platform and further deepen and enhance our leading e-commerce capabilities in fashion (including apparel, shoes, bags and accessories) and cosmetics categories as well as our strong female user base, thereby offering higher value and better user experience to our customers.”

Founded in 2008, Vipshop counts over 60 million active customers and is the largest online discount retailer in China by transaction value, working with over 22,000 brands. In its most recent quarter ended Sep.30, the New York Stock Exchange-listed Vipshop saw net income of $50.8 million on net revenue of $2.3 billion.

“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.”

“We already see substantial demand from our users to discover, discuss and purchase branded apparel in our applications,” Martin Lau, president of Tencent Holdings, said, “and we believe that connecting our users more deeply to products on Vipshop’s platform will enrich their online experiences while benefiting Vipshop.”

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Tencent and JD.com Invest $863 Million in Online Discount Retailer Vipshop

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