Date
24 September 2017
The successful marriage of Tencent and JD.com gave 58.com the confidence in joining the Tencent family. Photo: WSJ.com
The successful marriage of Tencent and JD.com gave 58.com the confidence in joining the Tencent family. Photo: WSJ.com

How Tencent got 58.com in just 10 days

Chinese internet giant Tencent has acquired classified ads site 58.com after just 10 days of discussions.

The speedy conclusion of the US$736 million deal has a lot to do with Tencent’s M&A style. Much like Warren Buffett’s approach, Tencent brings its resources to the party — the huge online traffic generated by its instant messaging application WeChat — and allow the target to continue to control its business.

Yao Jinbo, founder and chairman of 58.com, explained why he quickly accepted Tencent’s offer. Writing in his Sina Weibo, he said the successful marriage of Tencent and JD.com gave him confidence in joining the Tencent family.

In most of its acquisitions, Tencent does not own a controlling stake. For example, it holds about 20 percent of 58.com, 14 percent of JD.com, 15 percent of real estate provider Leju and 20 percent of restaurant-rating app Dianping.

Rather than telling its partners what to do, Tencent adds more value by focusing on what it is good at– perfecting its own platform and generating more traffic for everybody to share.

A Tencent insider once told National Business Daily that every company has its own limitations. Tencent cannot do everything by itself and therefore chooses to acquire stakes in other firms but leaves the decision-making process to them.

58.com has its niche on small and medium-sized firms. If people want to find jobs or houses to rent, 58.com is the first name that pops up in their mind. Tencent is likely to bring more mobile internet traffic to the site.

58.com listed on the New York Stock Exchange in October last year. The company said it would use part of the proceeds from the Tencent deal to repurchase some shares from its pre-IPO shareholders. The stock soared over 5 percent after the deal was announced last Friday.

– Contact the writer at [email protected]

CG

EJ Insight writer

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