Tencent Buys Over 11 Million Shares in Meituan, Raising Nearly $400 Million and Acquiring a 17.2% Stake in the Firm

On the evening of July 13, Chinese delivery and e-commerce giant Meituan announced that all preconditions for the items contained in Tencent‘s subscription agreement had been reached.

After completing the agreement with Tencent, Meituan has allotted and issued 11.353 million shares to the firm, meaning that Tencent Subscription Shares issued by Meituan rose to 0.2% of its issued share capital.

The estimated net proceeds from the deal are expected to be about $400 million, while the subscription price stands at HK $273.78 per share. Tencent holds a total of 17.2% in Meituan after the subscription’s completion.

Meituan plans to use the net proceeds from the transaction for technological innovation, including research and development in cutting-edge technology fields such as unmanned vehicles and drones for delivery, as well as for general use.

Meituan closed trading up 3.44% to settle at HK $295 per share yesterday.

On April 19, Meituan planned to raise up to $10 billion by issuing stocks and convertible bonds, marking the highest value in the history of additional issuances by HKEx. Tencent subscribed for $400 million worth of shares.

Founded in Beijing in 2011, Meituan is China’s leading e-commerce platform for life services. It operates popular apps such as public review platform Dianping and food delivery service Meituan Waimai. Its services span more than 200 categories including catering, food delivery, fresh-food retailing, ride-hailing, bike-sharing and entertainment, covering 2,800 counties and cities across China.

SEE ALSO: Meituan to Launch Food Delivery Butler Service for Restaurants, Speeding Growth of Take-away Services

On September 20, 2018, Meituan Dianping was listed on the Hong Kong Stock Exchange (HKSE). In China and around the world, companies that compete with Dianping to varying degrees include Alibaba, Tencent, Beyond Meat, Yelp Inc and others.