Tencent To Acquire 9.9% Of China South City For $193M

Hong Kong-listed Chinese logistics center developer China South City Holdings Ltd. and Tencent Holdings Ltd. jointly announced that the two companies have entered into an agreement to form a strategic partnership.

Tencent will acquire 680.3 million new shares of Beijing-based China South City at HK$2.20 per share for a total of HK$1.50 billion (US$193 million).

After the completion of the share purchase, Tencent will become China South City’s strategic shareholder with a 9.9% stake.

The price represents a premium of approximately 1.4% to the closing price of HK$2.17 per share on 13 January 2014 before the announcement.

Tencent also has options to purchase additional shares of China South City at HK$3.50 within a two-year period, potentially enlarging its stake up to 13%.

As part of the deal, Tencent will obtain the right to propose a candidate for appointment to the board of China South City.

The two companies will collaborate in integrated online and offline trade services, including e-commerce, outlet services for branded goods, O2O (Online To Offline) retail business, online payment and warehousing and logistics arrangements.

China South City intends to use the net proceeds to pursue land and for general corporate purposes.

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