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Tencent To Allocate $19.8B Meituan Stake As Special Dividend After Posting Consecutive Revenue Decline

Benzinga · 11/16/2022 07:30
  • Tencent Holdings Ltd (OTC:TCEHY) pledged to distribute the majority of its shares in meal delivery giant Meituan (OTC:MPNGF) (OTC:MPNGY) to investors as China's social media leader ramps up plans to reduce its extensive holdings across the world's largest internet industry.
  • Tencent, which had announced plans to pare its stake in online retailer JD.com, Inc (NASDAQ:JD), will dole out more than 958 million Class B stock in Meituan as a special dividend to existing shareholders, Bloomberg reports.
  • Tencent reported a revenue decline for the second quarter, highlighting the impact of China's worsening economy and regulatory headwinds.
  • Also Read: Tencent Fails To Win Gaming License Since China Lifted Suspension; Although NetEase Makes A Breakthrough
  • Tencent's revenue fell 2% to 140.1 billion yuan ($19.8 billion) in the September quarter, below the consensus of 141.4 billion yuan. Net income came in at 39.9 billion yuan, above the 25.2 billion yuan estimate. 
  • The stock to be paid out, valued at about HK$155 billion ($19.9 billion), marks about 91% of Tencent's Class B stake. 
  • Apart from JD and Meituan, Tencent also owns part of Kuaishou Technology (OTC:KSHTY), DiDi Global Inc (OTC:DIDIY), and Bilibili Inc (NASDAQ:BILI).
  • Tencent sold about $3 billion in shares in Southeast Asia's biggest internet company, Sea Limited (NYSE:SE).
  • "Tencent giving away Meituan shares looks like a move to become regulatory compliant," the report cited Shawn Yang, an analyst with Blue Lotus Capital Advisors who has a buy rating on Tencent. "They won't be in the same camp anymore but will be normal business partners going forward," which reduces Tencent's influence over the online commerce industry. 
  • Price Action: TCEHY shares closed higher by 10.78% at $37 on Tuesday.