Behind Tencent's $736 million investment in 58.com

On the evening of June 27, the Brazil World Cup ushered in its first non-match day. After two weeks of clamor, the world should have entered a short "half-time break", but unexpectedly, news of a flash marriage between two major Internet companies came out: Tencent spent $736 million to acquire 19.9% ​​of 58.com's shares! The tranquility that should have been in the world was broken by this "whistle".

According to the investment agreement, Tencent will subscribe and purchase 36,805,000 Class A common shares and Class B common shares from 58.com at a price of US$20 per common share, equivalent to US$40 per American depositary share.

58.com said it would repurchase 27,603,750 Class B common shares from some existing shareholders. After the transaction is completed, Tencent will own a total of 19.9% ​​of the total outstanding shares of 58.com and 15.2% of the voting rights of 58.com (calculated on a fully diluted basis).

Such a big deal seems to be the product of careful planning. However, a Weibo post by 58.com CEO Yao Jinbo seems to respond to the fact of "flash marriage". He said on Weibo that the entire transaction took only 10 days from start to finish. Is it really a case of love between a man and a woman? For a while, speculations were endless, and everyone's attention was focused on the motive of this marriage.

According to the information disclosed in the agreement: In the future, the two parties will regard each other as the preferred partner in their respective local services, and the two companies will leverage the advantages of their respective platforms to jointly create the next generation of O2O services.

"O2O" layout, each taking what they need

Tencent has already given local life services an important position in its overall strategic layout, which can be seen from its huge investment in Dianping.com. The O2O concept and continuous offline layout that Tencent has always advocated can also illustrate this point. 58.com, as the largest service provider in the classified information service field, not only has the natural advantage of localized services, but also has accumulated a large number of small and medium-sized merchant resources, which may add a lot of color to Tencent in the local life service chain.

58.com has always focused on online information services. In recent years, it has gradually increased its offline layout. This year, it has even announced that it will invest 1 billion US dollars in more segmented fields and carry out mergers and acquisitions. This shows to some extent that 58 is increasing its control over the upstream of vertical fields. Since last year, 58 has made great efforts to develop vertical service markets including moving and chauffeur services. It happens that this path can enable Tencent to provide more extensive local services without having to build a complete offline system. At the same time, merchants will also benefit from better customer relationship management and more accurate consumer advertising services. From this point of view, 58 seems to be the most ideal marriage partner for Tencent at this stage.

In fact, whether it is moving, tutoring or driving, these are all services based on strong social relationships. For 58.com, which focuses on information services, it is in urgent need of a social method or tool that can increase communication and enhance user stickiness. Tencent's QQ, WeChat and QQ Space and other products have natural social attributes and front-end service advantages.

Therefore, by capturing traffic from Tencent's online assets such as QQ, WeChat, QQ Space, and QQ Browser, 58 will further expand its local user base, improve user experience, and enhance its own communication capabilities. Therefore, these resources of Tencent may further consolidate 58's position in the information service field.

The battle for the “entrance”: grab the first position

Looking at the development of the Internet in recent years, apart from the control of giants such as BAT in the first echelon, more and more "small giants" in vertical fields are rising and bursting out with a strong latecomer momentum. The fields that were once monopolized by giants are gradually showing a clear division of labor. The giants have begun to divert resources to the "small giants", who then conduct the next level of segmentation and penetration, and the entire industry chain has gradually entered a state of collaborative operation.

Based on this consideration, 58 may be an important link in Tencent's battle for position. By investing in JD.com , Tencent has laid an important link in the e-commerce ecological chain. Based on JD.com's own size, it is not ruled out that it will continue to carry out mergers and acquisitions and investments in subdivided fields in the future; by acquiring Dianping, Tencent has obtained the ticket to the local life market, and it is rumored that Dianping is planning to go public, which will also increase Tencent's chips in the local life field; this time, Tencent invested in 58.com, and it is precisely 58's advantageous resources in the field of local information services that Tencent is eyeing. It looks like an investment, but it is actually a position.

The specific details of the "engagement" between the two are not known yet. But what is certain is that the marriage between the two is a mutual consent and each gets what it wants.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.