China's Tencent to Withdraw from Meituan... 90% Special Dividend on Holdings

Most Meituan Shares Following JD.com Issued as Special Dividends
Government Surrenders to Antitrust Regulations

[Asia Economy Beijing=Special Correspondent Kim Hyunjung] Tencent Holdings is reducing its stake by distributing most of its Meituan shares to shareholders as a special dividend. This move is interpreted as a step to withdraw following JD.com amid strengthened government antitrust regulations.

According to Chinese economic media Caixin on the 17th, Tencent announced yesterday while releasing its Q3 earnings that it will distribute 958 million Meituan shares it holds to shareholders as a special dividend. At the same time, Tencent Chairman Liu Chiping resigned from his position as a non-executive director of Meituan.

Accordingly, Tencent will distribute 958 million Meituan (Class B ordinary shares) shares it holds as a physical dividend to eligible Tencent shareholders on a basis of "1 share per 10 shares." Considering Meituan's closing price yesterday (HKD 162.3 per share), the Meituan shares to be distributed this time amount to a total of HKD 155.4 billion (approximately KRW 26.4413 trillion).

According to Meituan's semi-annual report, as of June 30, Tencent held 1.0546 billion Meituan shares and was the largest shareholder with a 19.75% stake. Through this dividend, Tencent will dispose of 91% of the Meituan shares it held. Tencent expects the dividend to be completed by March next year. Tencent has been investing in Meituan since 2014, and before Meituan's listing on the Hong Kong Stock Exchange in 2018, its stake reached 20.1%.

This measure is interpreted as a response to the Chinese authorities raising regulatory levels by strengthening crackdowns on monopolies and unfair practices of big tech companies through amendments to the antitrust law. Last year, China's top leadership presented "antitrust and prevention of disorderly expansion of capital" as one of the eight major policy tasks at the Central Economic Work Conference, and in February of the same year, announced and implemented the "Platform Economy Antitrust Guidelines" effective immediately. In 2021, China's antitrust enforcement agencies detected 175 cases of antitrust law violations and imposed total fines of RMB 23.529 billion, with internet sector fines totaling RMB 21.74 billion, accounting for 92.1% of the total.

At the end of last year, Tencent also distributed 457.3 million shares, or 86.4%, of its JD.com shares to shareholders as a special dividend, similar to this time. This JD.com stake was worth HKD 127.7 billion based on the Hong Kong stock market closing price on the announcement day. At that time, Chairman Liu Chiping also resigned from JD.com's board.

This content was produced with the assistance of AI translation services.