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Tencent to buy stake in restaurant ratings site Dianping
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Tencent, one of China's biggest Internet companies, is set to announce a deal on Wednesday to purchase a 20-percent stake in restaurant ratings and group buying website Dianping for US$400 million, China Business News reported on Monday.
Tencent holds the option to buy another 5 percent of Dianping within a year when the latter launches its initial public offering overseas, the report said.
Competition has escalated among BAT, the acronym for China's three Internet giants (the other two being the leading search engine Baidu and ecommerce group Alibaba) as they seek growth through the expansion of O2O (online to offline) services.
On February 10, Alibaba offered US$1.1 billion to acquire AutoNavi Holdings Ltd, making the Chinese digital mapping and navigation firm its wholly owned subsidiary. Given Alibaba's previous deals with group buying website Meituan.com and taxi-calling app Kuaidi, analysts predict strong O20 performance from the company.
Baidu is expected to fare well too in the 020 sphere thanks to its alliance with Meituan's rival Nuomi.com and online app store 91 Wireless.
Wednesday's deal between Tencent and Dianping is believed to benefit both companies as the former can reap more revenues from bricks and mortar stores while the latter will gain a wider public exposure due to Tencent's large user base, especially in its trending instant message app WeChat.
By 3pm on Monday, Tencent shares had risen 4.5 percent in Hong Kong.
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