Corporate China | Weibo: Tencent's quick take on 58.com; Xiaomi tries on Vancl
A series of microblog posts this past week is highlighting the breakneck pace of wheeling and dealing happening behind the scenes on China's Internet as it undergoes an unprecedented wave of consolidation. What started as a trickle of buying early last year has become so routine that barely anyone notices now when new deals worth hundreds of millions of dollars are signed. Equally interesting are the untold stories of companies quietly being dismantled in the wake of larger deals, and hints of deals to come in the microblog posts of executives at firms leading the consolidation.
The first category of developments saw barely anyone take notice last week when leading Internet firm Tencent announced it would pay US$736 million for 20 per cent (HK$5.6 billion) of 58.com (NYSE: WUBA), a recently listed online classified advertising site often called the Craig's List of China. Behind-the-scenes details about the deal were disclosed in postings by 58.com's chief executive, including the lightning-fast speed in which the deal was reached.
Meantime, the second category of developments has seen Tencent's former e-commerce site, Yixun.com, being rapidly dismantled following Tencent's equity tie-up earlier this year with JD.com (Nasdaq: JD), China's second largest e-commerce site. In the final category of signs of things to come, the top executive from smartphone sensation Xiaomi was sending signals that his company could soon purchase a major stake in faded online clothing seller Vancl.
Tencent's spending of nearly $800 million for 20 per cent of 58.com would have been major headline news two years ago, when China's Internet was still highly fragmented and in dire need of consolidation. But so many big deals have happened over the last 12 months that no one pays much attention anymore to anything worth less than $1 billion.
While market watchers see the results of these deals when they're announced, new comments from 58.com CEO Yao Jingbo show just how frenetic the pace of deal-making has become as big names like Tencent, Alibaba, Baidu (Nasdaq: BIDU) and even Xiaomi start to snap up any asset they can find. One of the earliest M&A deals in the current consolidation saw Alibaba take a half year to reach an agreement to buy 18 per cent of the popular Weibo (Nasdaq: WB) microbloggging platform for $586 million. In many ways that deal kicked off the current round of M&A.