According to four sources with knowledge of the situation, Tencent Holdings of the Chinese mainland intends to monetize an eight-year-old investment by selling all or the majority of its US$24 billion holding in the food delivery company Meituan.
According to three of the sources, Tencent, which owns 17 percent of Meituan, has been meeting with financial consultants recently to determine how to carry out a possibly sizable sale of its Meituan stock.
The dominant messaging app on the mainland, WeChat, is owned by the tech giant Tencent, which made its initial investment in Meituan’s rival Dianping in 2014. A year later, Meituan and Dianping combined to establish the current company.
Tencent’s 17 percent ownership share is valued at US$24.3 billion based on Meituan’s market valuation as of Monday.
If market conditions are appropriate, Tencent hopes to begin the sale this year, according to two of the sources.
Following the article, shares of Meituan, which is listed on the Hong Kong Stock Exchange, tumbled by more than 10%, while Tencent’s shares dipped by more than 2% on Tuesday before recovering to rise by 1%.
Tencent chose not to respond. An inquiry for comment from Meituan received no response.
Due to confidentiality requirements, all of the sources declined to give their names.
Tencent stated in December that it would sell off about 86 percent of its $16.4 billion ($16.4 billion) interest in JD.com Inc., diminishing its ties to the second-largest e-commerce company on the Chinese mainland.
A month later, it raised $3 billion by selling a 2.6 percent ownership in the gaming and e-commerce firm SEA Ltd. in Singapore. This was considered a ploy to monetize its investment while changing the company’s business model.
According to two of the individuals, the proposed sale of the Meituan holding will probably be carried out through a block trade in the open market, which generally takes a day or two from marketing to completion.
In contrast to engaging in negotiations with a private buyer, they argued, it would be a quick and easy option for Tencent to sell the shares.
