Tencent Holdings Ltd, the biggest Internet company in Asia, made an official statement today revealing that it reached an agreement to acquire a stake in 58.com, which is a site similar to Craigslist, in a deal that is estimated at $736 million. The move is aimed at reinforcing the companys positions against rival Alibaba Group Holding Ltd.
Tencent Holdings Ltd explained that by acquiring the near-20% stake in 58.com it seeks to expand its online retailing presence, and that of its online messaging services, QQ and WeChat.
“The investment in 58.com is strategically positive for Tencent to deepen its footprint,” Alicia Yap, analyst at Barclays Plc, wrote in a reports cited by Bloomberg.
58.com was listed on the New York Stock Exchange in October. The company made an announcement that it intends to use part of the money raised from the deal with Tencent for buying back some shares from its pre-IPO shareholders.
The deal with 58.com comes only several weeks after Alibaba Group, Tencents chief competitor, revealed that it intends to acquire UCWeb. The two rivals have been rapidly expanding through partnerships and purchases over the past twelve months. Tencent has had a 20% takeover in Dianping in February, the acquisition of a 15% stake in JD.com in March and the purchase of a 15% stake in CJ Games Corp.
The latest deal of the company “can improve the user experience in its mobile platform and attract new customers,” Ricky Lai, analystat Guatai Junan Securities Co., said for Bloomberg.
Tencent Holdings Ltd was 0.17% down to close at 118.20 Hong Kong dollars per share yesterday, marking a one-year change of +94.28%. Tencent Holdings Ltd is valued at 1.11 trillion HKD.
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