Tencent (0700. HK), a Chinese gaming and social media business will distribute a $16.4 billion JD.com (9618. HK) stake to its shareholders as a dividend, weakening its links to the e-commerce giant and raising worries about its plans for other holdings.
Tencent announced on Thursday that it will transfer HK$127.69 billion ($16.37 billion) of its JD.com holdings to shareholders, reducing Tencent’s interest in China’s second-largest e-commerce company to 2.3 percent from approximately 17 percent today and handing Walmart the title of JD.com’s largest shareholder (WMT.N).
JD.com shares plunged 11.2% in early trade in Hong Kong on Thursday, the biggest daily percentage decline since its debut in the city in June 2020, before recovering partially to a 7% decline by 0450 GMT. The shares of Tencent, Asia’s most valuable listed company, rose 4%.
WeChat’s owner, who originally invested in JD.com in 2014, said it was the perfect moment to sell because the e-commerce company had reached a point where it could self-fund its growth.
The divestment comes as Beijing leads a wide regulatory assault on technology companies, focusing on their international expansion plans and domestic market power consolidation.
Although Tencent Executive Director and President Martin Lau will stand down from JD.com’s board of directors immediately, the businesses announced their commercial connection would continue, including an ongoing strategic collaboration agreement.
Tencent stockholders who are eligible will receive one JD.com share for every 21 shares they own.
