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

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  • Tencent Holdings Ltd TCEHY pledged to distribute the majority of its shares in meal delivery giant Meituan MPNGF 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 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 KSHTYDiDi Global Inc DIDIY, and Bilibili Inc BILI.
  • Tencent sold about $3 billion in shares in Southeast Asia's biggest internet company, Sea Limited 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.
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