HONG KONG—Chinese language social-media big
Tencent Holdings Ltd.
TCEHY -1.69%
is shedding most of its stake in
JD.com Inc.,
JD 0.46%
saying that the e-commerce firm has grown to the purpose the place it now not requires Tencent’s monetary backing.
Tencent on Thursday mentioned it could distribute about 457 million shares of JD.com, price roughly $16.4 billion, within the type of a particular dividend to Tencent shareholders. The distribution leaves Tencent with a 2.3% stake in JD.com from 17% earlier than, when it was JD’s largest shareholder.
Tencent’s shedding of its stake in JD successfully closes a chapter by which the social-media big constructed up a stake within the rival of
Alibaba
Group Holding Ltd. to problem it in China’s large e-commerce market. It nonetheless retains important stakes in different main e-commerce gamers resembling food-delivery firm
Meituan
and purchasing big
Pinduoduo Inc.
As a part of the brand new association, Tencent mentioned its president,
Martin Lau,
resigned from the board of JD.com. Tencent mentioned each corporations would proceed to keep up a enterprise relationship regardless of the disposal of its stake.
Shares of JD.com fell 7.6% in morning buying and selling in Hong Kong following the announcement of the distribution. Shares of Tencent rose 4.5%.
Tencent, finest recognized for its ubiquitous social-media app WeChat and for its dominant presence in China’s on-line gaming market, has invested broadly in tech corporations domestically and abroad, turning into a big backer of up-and-coming companies in social media, leisure and electrical autos.
A lot of these bets have paid off handsomely amid China’s long-running growth in tech-company shares. In November, Tencent disclosed an funding portfolio definitely worth the equal of $138 billion as of the top of September 2020, almost 10 occasions the determine it reported 4 years earlier.
Extra not too long ago, Tencent has been within the crosshairs of China’s regulatory crackdown on web and different massive tech corporations, serving to to ship shares down about 20% this yr.
In a analysis word, Thomas Chong, an analyst at funding financial institution Jefferies, mentioned JD.com has seen wholesome development in its financials, together with margins, income, profitability and money flows. “JD has demonstrated stable execution over the previous few years with continued enchancment in fundamentals since 2014,” he mentioned.
JD.com reported a 29% improve in income final yr, with web revenue greater than quadrupling to 49.4 billion yuan, or about $7.6 billion.
Write to Dan Strumpf at daniel.strumpf@wsj.com
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Appeared within the December 23, 2021, print version as ‘Tencent To Shed Stake in JD.com.’
