Vipshop Holdings Ltd – ADR (NYSE:VIPS), JD.Com Inc (ADR)(NASDAQ:JD) and Tencent Holdings Ltd (OTCMKTS:TCEHY) jointly reported that Tencent, a major provider firm of internet value-added offerings in China, and JD.com have finalized definitive deals with Vipshop, a major web discount retailer for Chinese brands, such that JD.com and Tencent will invest a total amount of around US$863 million in Vipshop at the deal closing.
Following the share subscription deal, JD.com and Tencent will register for newly issued Class “A” ordinary shares of VIPS in the sum of around US$604 million and around US$259 million, respectively. The deal price will be US$65.40 a Class “A” ordinary share, which comes equivalent to US$13.08 an American Depositary Share of Vipshop, 5 of which exhibit one Class “A” ordinary share. The deal price exhibits a 55% premium over the completion price of the ADSs as noted on December 15, 2017.
The deal is anticipated to close in the imminent period, contingent to set closing conditions. Post the closing, JD.com and Tencent will beneficially own, considering any current holding, around 5.5% and 7%, respectively, of Vipshop’s issued shares. The Class “A” ordinary shares released to JD.com and Tencent will be subject to a 2-year lock up constraint.
JD.com and Tencent will have the right to engage an observer and a director, respectively, to Vipshop’s board during the 2-year lockup period. Post the close of the lock-up period, and by the time JD.com and Tencent hold approximately 8% and 12%, respectively, of Vipshop’s issued shares, or else by mutual deal with company, they will keep board observer and director rights.
Alongside with the record of the share subscription deal, JD.com and Tencent have finalized business cooperation deals with Vipshop, establishing a cooperative association among JD.com, Vipshop and Tencent. As per these deals, Tencent will allow Vipshop an entrance on the platform of Weixin Wallet allowing Vipshop to use traffic from Tencent Holdings’ Weixin platform, while JD.com will allow Vipshop entries on the prime page of JD.com’s mobile app and the key page of shopping entry of Weixin Discovery.