Careless driving

12 January 2015 By Robyn Mak Follow @mak_robyn

E-commerce group JD.com is buying 25 pct of car portal Bitauto for $1.2 bln. Yet two-thirds of the value is in the form of “resources”, like handing over part of JD.com’s website. Though a tie-up may make strategic sense, shareholders have to take the financial benefits on trust.

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Chinese e-commerce group JD.com and gaming and social media company Tencent will jointly invest $1.3 billion in cash and resources in Bitauto, an auto information website operator, the company announced on Jan. 9.

As part of the deal, JD.com will pay $400 million in cash and $750 million in resources to Bitauto in return for a 25 percent stake. JD.com will also get a seat on Bitauto’s board. Under the terms of the agreement, Bitauto will have a five year non-compete agreement as well as the exclusive rights to operate the new and used car channels on JD.com’s website.

Tencent will purchase newly issued shares worth $150 million at a price of $73.31, giving it 3.3 percent of Bitauto’s outstanding shares after the deal is completed.

Additionally, JD.com and Tencent will also purchase a 44 percent stake in YiXin Capital, Bitauto’s auto finance subsidiary, for $250 million.

Shares of NYSE-listed Bitauto closed up 6 percent at $89.11 on Friday, Jan. 9.

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