(Adds competition for online-to-offline services with Alibaba,
* Tencent buys 20 pct of Dianping for undisclosed sum
* Stake can be increased by undisclosed additional amount in
* Dianping is China's biggest restaurant review site
* Tencent is building up e-commerce ops as Alibaba enters
social media, gaming
SHANGHAI, Feb 19 China's Tencent Holdings Ltd
has bought 20 percent of Dianping, the country's
largest restaurant review and business listing site, as the
social media leader lands a blow in Chinese Internet firms'
battle to link online content with offline services.
Online-to-offline, or O2O, builds on the meteoric rise of
smartphone use in China, turning a simple search into a shopping
trip or meal based on the user's location.
Tencent, China's e-commerce king Alibaba Group Holding Ltd
and search engine giant Baidu Inc are all
competing to establish dominance in the field, as a way to cash
in on China's mobile Internet wave.
On Wednesday, Tencent said in a filing to the Hong Kong
Exchange that its wholly owned subsidiary Huai River had
purchased a 20 percent stake in Dianping for an undisclosed sum.
Dianping's "merchant information, consumer reviews,
discount, group buying, online restaurant reservation and take
out ordering services, will be integrated with Tencent's social
communications platforms," Tencent said in a press release
issued on Wednesday.
The agreement includes an option to purchase an unspecified
amount of additional shares in Dianping, "contingent on certain
events occurring in the future," the filing said.
In a Shanghai press conference on Wednesday, Tencent
President Martin Lau said the company does not currently plan to
increase its stake.
Dianping is similar to U.S. firm Yelp Inc and
group-buying site GroupOn Inc. Tencent's main social
networks are QQ and mobile messaging app Weixin, or WeChat as it
is known outside China, which has taken China by storm.
Tencent's investment in Dianping will help standardise and
scale up the review and listing site, while Dianping will give
Tencent access to its strong user content and member
information, said Zhang Tao, Dianping's chief executive, at the
Through the partnership with Tencent, Dianping wants to
build China's biggest O2O system, Zhang said.
Tencent's Dianping deal follows a HK$1.5 billion ($193.40
million) buy into logistics firm China South City Holdings Ltd
Also last month, Baidu bought the remaining stake of
group-buying business Nuomi - comparable to GroupOn - from
Renren Inc in its own dash for O2O real estate.
Echoing the efforts of Tencent and Baidu, Alibaba this month
offered to take over AutoNavi Holdings Ltd in a deal
valuing the digital mapping and navigation firm at $1.58
Tencent is expanding its social media empire beyond
messaging, games and stickers to encompass more smartphone
The firm wants to allow people to use their smartphones to
interact with their surroundings and do things like buy goods
through WeChat Payment, Tencent's mobile payment platform, and
use the Didi Dache app, which it has a stake in, to book taxis.
Dianping has over 90 million active monthly users in over
2,300 Chinese cities, whom it connects to over eight million
sellers, according to Dianping's official website.
The review site is planning an initial public offering but
has no timetable, Zhang said, adding that Dianping's management
would remain independent and that any IPO would be pursued
Chinese media have reported that the firm wants to go public
within the next five years, possibly in the United States.
($1 = 7.7557 Hong Kong dollars)
(Reporting by Adam Jourdan; Additional reporting by Paul
Carsten; Editing by Christopher Cushing)