Tencent (40% owner of Epic Games) is giving away $16B of its stake in JD.com | WRAL TechWire (2024)

By Laura He, CNN Business

China tech giantTencentis dramatically cutting its stake inJD.com, China’s second largest e-commerce company, as it seeks to stay on the right side of Beijing, which has beencracking down on tech giantsto rein in their growing power and influence.

[Tencent is a 40% owner of Cary-based Epic Games.]

Tencent plans to distribute more than $16 billion worth of its stake in JD.com to its shareholders as a one-time dividend, the Chinese gaming and social media giant said Thursday ina stock exchange filing. The 457 million shares that Tencent plans to give out represent 86.4% of its stake at JD.com, or 14.7% of JD.com’s total issued shares.

Currently, Tencent controls 17% of JD.com. After the distribution, its stake will drop to to 2.3%, which means it will no longer be JD.com’s largest shareholder.

JD.com founder Richard Liu Qiangdong, who holds 13.9% of shares, will become the biggest stakeholder, according to the company’slatest annual report. Walmart follows, with a 9.3% stake.

China hammers Tencent (minority owner in Epic Games), other tech giants again

This surprising retreat by Tencent comes at a time when the country’s internet giants are under intense pressure from Beijing.

For the past year,China hasincreased scrutinyof the tech industry,publisheddetailed rules aimed at tackling unfair competition,slappedcompanies with massive fines, anddemandedthat some firms completely overhaul their businesses.

In its filing on Thursday, Tencent said that JD.com has reached a status where it canfinance its own growth.

It is, therefore, “an appropriate time” to transfer the majority of the stake to its shareholders, Tencent said.

The move may reduce Tencent’s “dominance” in the market and “is potentially an attempt to shift towards fairer competition, as well as to be more in line with the agenda for China authorities,” said Yeap Jun Rong, market strategist for IG, in a research note on Thursday.

As part of the deal, Tencent President Martin Lau will step down as a director of JD.com, according to the filing.

Tencent – 40% owner of Epic Games – is suffering financially under China’s crackdown

The two companies will “continue to maintain their mutually beneficial business relationship,” including their ongoing strategic partnership agreement, Tencent and JD.com said in separate statements on Thursday.

Tencent’s stock surged more than 4% in Hong Kong on Thursday, while JD.com’s shares tumbled 7%.

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