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Tencent and JD.com to invest $863m in online retailer Vipshop

Published 19 December 2017

Chinese internet companies Tencent and JD.com have agreed to invest $863m into discount online retailer Vipshop.

Tencent and JD.com will buy Vipshop Class A ordinary shares for $65.40 a piece, the equivalent of $13.08 per American depositary share.

Tencent will acquire newly issued Class A shares for $604m and JD.com is investing $259m.

Upon completion of the deal , Tencent will hold a 7% stake and JD.com a 5.5% interest in Vipshop.

The stake acquisition is subject to customary closing conditions and is expected to be completed in the near future. 

The two companies will each own the right to appoint a director and an observer, respectively to Vipshop’s board during the two year period.

By agreeing to acquire the shares in Vipshop, Tencent and JD.com have concurrently entered into a business cooperation agreements. Under the agreements, Tencent will grant an entry to Vipshop in the interface of Weixin Wallet that can enable Vipshop to use traffic from Tencent's Weixin platform.

JD.com, on the other hand, will also 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 its platform.

Vipshop co-founder, board of directors chairman and CEO Eric Ya Shen said: “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.

“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."

Image: Vipshop will now be able to leverage Tencent and JD.com’s technologies. Photo: Courtesy of Supertrooper/FreeDigitalPhotos.net.