Home » Why Tencent is making an offer to buyout car comparison site Bitauto
Why Tencent is making an offer to buyout car comparison site Bitauto
Tencent, along with partner Hammer Capital, just recently made an offer to buyout Bitauto, a Chinese-based car comparing platform, for arond $16 per share.
Tencent's proposal is backed by a number of Bitauto shareholders -- including its e-commerce partner JD.com -- that in total own more than 48.5% of the company. If the buyout is approved, Bitauto's shares will be delisted and the company will become a private subsidiary of Tencent.What does Bitauto do?
Bitauto's website provides consumers with data and prices for vehicles, and connects shoppers with dealers of new and used cars. It mainly generates revenue from ads, site subscriptions, transaction services, and digital marketing solutions for automakers.
Bitauto's platform is integrated into Tencent's WeChat, the most popular mobile messaging app in China, as well as JD's online marketplace. However, Bitauto's revenue growth has still decelerated significantly over the past five years, with inconsistent earnings growth.
That slowdown occured for two main reasons. First, the company faces tough competition from its main rival Autohome. Second, sales of new cars in China have fallen annually for 13 straight months through August, and Fitch Solutions projects a 9% drop for the full year.