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Tencent Holdings Ltd in discussions to consolidate e-commerce business with JD.com Inc-sources

February 20
11:30 AM 2014

Two sources told Bloomberg that Tencent Holdings Ltd and JD.com Inc are discussing the possibility of merging their e-commerce businesses. Tencent is the biggest Internet firm in Asia while JD.com Inc is a China-based online retailer.

One of the sources who did not wish to be named because of the confidential nature of the discussions told Bloomberg that both firms are exploring consolidation options which would have Tencent supporting the shopping operations in exchange for a 6% holding in the Beijing-based online retailer. Should the consolidation push through, it would join the forces of JD.com's already established market that offers goods ranging from electronics to fashion with the not so well-known e-commerce operation of Tencent. However, JD.com could benefit from Tencent's WeChat messaging service which boasts of 272 million active users that could direct more potential shoppers to its doors, the report said.

Last month, JD.com, which is supported by Russian billionaire Yuri Milner's DST Global, filed for a $1.5 billion initial public offering in the US. This is the biggest IPO of a Chinese Internet firm in the US. One source said that JD.com intends to come to an agreement with Tencent before the IPO, Bloomberg reported.

Tencent has been improving its e-commerce offers by putting together messaging with other services like shopping and gaming to better take on rival Alibaba Group Holding Ltd. The Shenzhen-based Internet firm is also the owner of Yixun.com, a retail website. Last month, Tencent also agreed to make a HK$1.5 billion or $193 milllion investment in a logistics and warehouse network owner, China South City Holdings Ltd, the report said.

In its IPO filing, JD.com said it competes with the retail operations of Yixun.com. Moreover, JD.com also said that its other competitors include the China unit of Amazon.com Inc and the Taobao and Tmall sites of Alibaba, the report said.

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