Tencent Music Entertainment has announced its plans to acquire the podcast startup Ximalaya to establish itself as China’s version of Spotify.
Tencent Music’s filing with the Hong Kong Stock Exchange on Tuesday revealed that the acquisition involves a cash-and-stock deal valued at $1.26 billion. In addition to making cash payments to Ximalaya’s shareholders, Tencent Music will also issue ordinary shares as part of the transaction.
As Tencent Music noted in its announcement, Ximalaya is set to undergo a restructuring of its existing business operations as part of this acquisition.
Following the acquisition news, Tencent Music’s stock, traded on U.S. exchanges, increased 6.7% during premarket trading.
Established in mid-2016 after Tencent acquired a controlling interest in China Music Corp. and merged it with its streaming services, Tencent Music has evolved into a leading online music entertainment platform in China. Major apps under its umbrella include QQ Music and Kugou, and the company went public on the New York Stock Exchange in late 2018. Despite having approximately 555 million monthly average users as of the first quarter, this figure marks a 4% decline from the previous year.
Founded in 2012, Ximalaya is a well-known audio content platform in China. It offers a variety of media, such as podcasts and audiobooks. Notably, access to Spotify’s services is restricted in China.
