Tencent to acquire a 15% stake in JD.com to take on Alibaba

Tencent, one of China’s largest Internet services companies and the maker of WeChat, and JD.com have formed a strategic partnership. The deal can potentially boost Tencent’s competitive position against rival Alibaba Group, which dominates China’s fast-growing e-commerce market. Though it’s much smaller than Alibaba Group, JD.com is China’s second-largest e-commerce company, and made a total of $16.5 billion in sales last year. 

Tencent Holdings Ltd. (700)Asia’s largest Internet company, agreed to buy a 15 percent stake in Chinese e-commerce website JD.com Inc. to build a stronger competitor to Alibaba Group Holding Ltd. Tencent will pay $214.7 million in cash and transfer its e-commerce businesses QQ Wanggou and Paipai and a minority stake in Yixun to JD.com, according to a filing today. Tencent also agreed to buy a further stake representing 5 percent of the company after it completes an initial public offering, it said. The deal will combine JD.com’s established market selling everything from electronics to fashion with Tencent’s less-popular e-commerce platform and provide a bigger challenger to Alibaba, China’s biggest operator. For JD.com, which is planning a U.S. IPO, the 272 million active users on Tencent’s WeChat message service could boost traffic to its online store.

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