Vipshop receives $863M from Tencent and JD
Tencent, JD.com, Vipshop announce investment, business cooperation – Tencent Holdings (TCEHY), JD.com (JD), and Vipshop (VIPS) jointly announced that Tencent and JD.com have entered into definitive agreements with Vipshop, such that Tencent and JD.com will invest an aggregate amount of approximately $863M in cash in Vipshop at the closing of the transaction.
Pursuant to the share subscription agreement, Tencent and JD.com will subscribe for newly issued Class A ordinary shares of Vipshop in the amount of approximately $604M and approximately $259M, respectively.
The purchase price will be $65.40 per Class A ordinary share, which is equivalent to $13.08 per American Depositary Share of Vipshop, five of which represent one Class A ordinary share.
The purchase price represents a 55% premium over the closing price of the ADSs as of the last trading day on December 15.
The transaction is expected to close in the near future, subject to customary closing conditions. Upon the closing, Tencent and JD.com will beneficially own, taking into account any existing holding, approximately 7% and 5.5%, respectively, of Vipshop’s total issued shares.
The Class A ordinary shares issued to Tencent and JD.com will be subject to a two-year lock up restriction. Tencent and JD.com will have the right to appoint a director and an observer, respectively, to Vipshop’s board of directors during the two-year lockup period.
After the end of the lock-up period, for so long as Tencent and JD.com hold approximately 12% and 8%, respectively, of Vipshop’s total issued shares, or otherwise by mutual agreement with Vipshop, they will maintain director and board observer rights.
Concurrently with the entry of the share subscription agreement, Tencent and JD.com have entered into business cooperation agreements with Vipshop, effective upon closing, establishing a cooperative relationship among Tencent, JD.com and Vipshop.
Under these agreements, Tencent will grant Vipshop an entry on the interface of Weixin Wallet enabling Vipshop to utilize traffic from Tencent’s Weixin platform, and JD.com will 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 JD.com’s platform.
VIPS closed at $8.44. It last traded at $12.48.
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