58.com, China’s largest classified site by monthly unique visitors, has bought rival Ganji.com. Beijing-based 58.com forked over $412.2 million in cash as well 34 million newly issued shares for a 43.2 percent stake in Ganji.com.
58.com, which went public on the New York Stock Exchange in 2013, also disclosed that it has received $400 million from returning investor Tencent.
In exchange, Chinese Internet giant Tencent, which is probably best known in the West as the maker of messaging app WeChat, will increase its stake in the company to 25.1 percent stake of the company.
After the deal is finalized, 58.com and Ganji.com will continue to operate separately.
The deal is notable for a couple of reasons. First, it points to the increasing importance of online-to-offline (O2O) transactions for Chinese e-commerce companies. 58.com’s O2O businesses include home services like cleaning and moving, while Ganji.com operates a secondhand car marketplace in 12 cities.
Secondly, as Caixin points out, it’s another example of consolidation in China’s tech industry. Other notable mergers include the marriage of taxi-hailing apps Didi Dache and Kuaidi Dache in February, and that of streaming video platforms Youku and Tudou in 2012.
All of these deals underscore the importance of the three largest consumer Internet companies in China: Baidu, Alibaba, and Tencent. The three giants, which are jointly referred to as “BAT” own significant stakes or are investors in many smaller companies. For example, Tencent and Alibaba hold stakes in Kuadi Dache and Didi Dache, respectively, while Alibaba also holds a stake in Youku Tudou.
Baidu competes against the taxi-hailing apps with its investment in Uber, while its own video-streaming platform iQiyi is a Youku-Tudou rival.