(Yicai Global) Dec. 18 -- Chinese internet giants Tencent Holdings Ltd. and JD.Com Inc. agreed to increase their stakes in Vipshop Holdings Ltd. [NYSE:VIPS], buying around USD863 million ordinary shares, to strengthen their partnership with the e-commerce website operator.
Tencent [HKG:0700] will spend USD604 million on newly issued Vipshop Class-A shares, the three Chinese companies said today. JD.Com [NASDAQ:JD] will invest USD259 million. Their holdings will rise to 7 percent and 5.5 percent, respectively.
The two will pay USD65.40 a share, the equivalent of USD13.08 per American Depository Share (one ADS is worth 0.2 Class-A ordinary share). That represents a premium of more than 55 percent on the ADS closing price on Dec. 15.
"I'm delighted to be a strategic partner of Tencent and JD," said Shen Ya, co-founder, chairman and chief executive of Guangzhou-based Vipshop. "Vipshop will further strengthen its leading position in areas such as fashion items and makeup and its advantages in attracting female consumers to provide higher value and better experience for member consumers."
Under the agreement, Tencent will open a Vipshop channel in its mobile payment system WeChat Wallet. JD.Com will make Vipshop accessible on its mobile app and its WeChat shopping interface to increase Vipshop's traffic.
"The cooperation will further step up our efforts in making inroads into the female consumer market and expand both the scope and depth of our fashion business," JD.Com Chairman and CEO Liu Qiangdong said. "We'll guarantee provision of a wide range of purchasing choices and the best shopping experience for our users by joining hands with top-level partners that complement our advantages."
"Tencent expects to help Vipshop offer branded clothes and other product categories for the rising middle class in China by means of Tencent's flow of users, market promotion and payment solutions," President Liu Zhiping said. "We believe the in-depth connection between our users and quality commodities of Vipshop will not only enrich their online shopping experiences, but also increase Vishop's value."
Tencent and JD.Com's Class-A ordinary shares will be subject to a two-year lock-up period during which Tencent has the right to appoint a director and JD has the right to appoint an observer to Vipshop's board. After that period, Tencent and JD will continue to enjoy these appointment rights if they hold around 12 percent and 8 percent of all issued shares, respectively.