Tencent Holdings Ltd, China's biggest listed tech firm, will buy a 20 percent stake in online classifieds company 58.com Inc for $736 million as the company looks to boost its presence in the e-commerce business.
Tencent, known for its mobile messaging app WeChat, has already spent more than $1.2 billion in areas such as e-commerce, real estate and digital mapping since the beginning of 2014. Its many investments include a March tie-up with JD.com Inc.
The deal will help 58.com Inc, dubbed the Craigslist of China, to draw more traffic by clubbing its services with Tencent's online sites such as QQ, Weixin, QQ.com, and QQ browser, the companies said on Friday.
58.com's ADSs, which fell as much as 7 percent in early trade, recovered later to be up 2.6 percent.
Tencent will buy 36.8 million Class A and B ordinary shares of 58.com for $20 per share, which corresponds to $40 per American Depositary Share (ADS).
58.com will use part of the proceeds to buy back about 28 million shares from existing pre-IPO shareholders.
58.com's shares were trading at $53.60 on the New York Stock Exchange. They have nearly doubled in value since listing in October.
(Reporting By Lehar Maan in Bangalore; Editing by Sriraj Kalluvila)