Top 10 M&A cases in the internet industry in the first half of 2014

Published:2014-09-26    Source:HICG

Increasing amount of M&A transactions in China in the first half of 2014, which is more significant in the internet industry. The following case studies are the Top 10 domestic M&A transactions in the internet industry in the first half of 2014.

1.Alibaba acquiring UCweb

On 11th June, Alibaba and UCweb announced that UCweb would join in the Alibaba Group, becoming a part of UC mobile business group. Mr. Yongfu Yu, the former CEO of UCweb, would join in the Strategy committee of Alibaba Group. Mr. Yu claimed that the valuation of the transaction would exceed the acquisition of 91web by Baidu, which was called “The largest M&A transaction in the internet industry in China”. After the transaction, Alibaba group would make up for the lack of mobile internet business for the forthcoming IPO activity. 

In 2009, Alibaba invested in UCweb as a strategic investors along with other two investment institutions. In March 2013, Alibaba increased its ownership in UCweb by spending 506 million USD. In December 2013, 180 million USD was spent by Alibaba on UCweb. These were the signs of the forthcoming dominance in UCweb by Alibaba. 

2.Tencent investing JD

The investment in JD from Tencent was considered as the most influential move in the E-commerce sector in China in 2014 so far. Both sides declared that Tencent paid 215 million USD for 15% of the equity of JD. Following the investment, Tencent was authorized to acquire additional 5% of the equity if JD went for IPO. JD would acquire 100% of the asset of QQ mall, PaiPaiand minority shares of Yixun which belonged to Tencent. CEO of Tencent, Mr. Zhiping Liu, would join the board of JD. Meanwhile, Tencent offered the client ends of Wechat and Mobile QQ along with other support to JD. Both sides would also work together on the online payment system.

After the initial public offering of JD, Tencent spent another 1.33 billion USD to acquire the shares of JD. According to the estimation of Tencent, it have invested about 17 billion CNY in 17.43% of JD.

3.Alibaba paid 1.22 billion USD for Youku’s shares

On 28th April, Youku and Alibaba announced a strategic partnership with each other. Alibaba, teamed up with Yunfeng Fund, together paid 1.22 billion USD for 18.5% of Youku’s shares. In addition, CEO of Alibaba Group, Mr. Zhaoxi Lu joined the board of Youku.

4.Alibaba acquired rest of the shares of AMAP

In April, AMAPannounced that it had accepted the tender offer from Alibaba. Alibaba would acquire 72% of the equities of AMAP. After the transaction, AMAPwould be delisted. In May 2013, Alibaba purchased 28% of AMAPwith 294 million USD. According to the terms, the Transaction would be closed by the end of 3rd quarter 2014. The total valuation of AMAPwas 1.5 billion USD.

5.Tencent invested 736 million USD in 58

On 28th June, Tencent and 58 announced that Tencent would invest 736 million USD in 58. Sequent to the transaction, Tencent would obtain 19.9% of the equities and 15.2% of the voting rights, becoming the largest shareholder. 

6.Alibaba invested 5.4 billion HKD in Intime Commercials

On 30th March, Alibaba Group and Intime Commercials Group announced that Alibaba would invest 5.37 billion HKD in Intime Commercials as a strategic investor. Both parties would form a fundamental online-to-offline commercial system. In this transaction, Alibaba would acquire the equities and CDS at the lump sum of 5.37 billion HKD. After a set of agreements, Alibaba was guaranteed with no less than 25% of the equities of Intime Commercials.

7.Tencent invested 400 million USD in Dianping

On 19th February, Tencent and Dianping announced that Tencent would invest 400 million USD in Dianping in exchange for 20% of the shares. In addition, terms guaranteed Tencent the right to invest into Dianping in the future.

8.Tencent invested 1.50 billion HKD in China South City

On 15th January, China South City, the real estate developer that focused on wholesale market and logistic real estate, announced that it would issue 68.03 billion shares at the price of 2.2 HKD to Tencent. Sequent to the transaction, Tencent would obtain 9.9% of the equities of China South City. The deal size was estimated at about 1.497 billion HKD. In addition, China South City stated that it granted Tencent the right to acquire another 245 million shares at 3.5 HKD in the future. Based on the price, Tencent might obtain 13.0% of the equities eventually.

9.Alibaba invested CNY in Guangzhou EverGrande Football Club

On 5th June, Alibaba Group officially signed the agreement of acquiring 50% of the Guangzhou EverGrande Football Club. Mr. Yun Ma declared that he hoped to promote the development of the football sports via this transaction.

10. Baidu acquired 100% of Nuomi

In January, Badi and Renren Inc. announced that Baidu would acquire all the shares of Nuomi possessed by Renren. Baidu would afterwards become the sole shareholder of Nuomi. Huaran Consulting considered that by acquiring the remaining shares from Renren, Baidu became confident of the consolidation of Nuomi generating synergies with the core business of Baidu. Sequent to the transaction, Baidu should be able to integrate its search engine, e-map and other off-line business with Nuomi.