58.com's Zhuan Zhuan to Acquire Used Handset Trading App Zhaoliangji
58.com, 4/07/20
Chinese online classifieds site 58.com (NYSE: WUBA) today announced that Zhuan Zhuan, an online used goods trading platform and a consolidated subsidiary of 58.com, has entered into definitive agreements to acquire a 100% equity interest in the operator of second-hand mobile phone trading app Zhaoliangji.
Under the agreement, Zhuan Zhuan will acquire Zhaoliangji operator Shenzhen Wanshifu Technology Co., Ltd. ("Shenzhen Wanshifu Technology") with a combination of cash in the amount of RMB 360 mln and newly issued shares of Zhuan Spirit Holdings Limited, Zhuan Zhuan's ultimate holding company. Shenzhen Wanshifu Technology operates the Zhaoliangji app (which translates into 'find nice phone'), an online platform for used mobile phones and accessories in China. The transactions contemplated under the definitive agreements are subject to customary closing conditions, and are currently expected to close in the coming months. If the transaction were to close pursuant to the terms in the definitive agreements, 58.com's equity interest in Zhuan Spirit Holdings Limited would be diluted from 54.6% to less than 50% on fully diluted basis. 58.com is assessing the accounting impact of the proposed transactions, if closed.
Michael Yao (Yao Jinbo), Chairman and CEO of 58.com, commented, "We believe that the combined horizontal and vertical model provides unparalleled strengths for classifieds marketplaces. We intend to replicate the proven success we had with the combination of 58.com, a horizontal classifieds platform, and Anjuke, an online housing vertical acquired in 2015. We believe Zhuan Zhuan, a horizontal used goods platform, and Zhaoliangji, a used cell phone vertical, will create another powerful combination."
Huang Wei, CEO of Zhuan Zhuan, commented, "We'd like to warmly welcome Zhaoliangji's highly experienced and talented team to Zhuan Zhuan. Used cellphones are the third largest category in the second-hand market in China after secondary homes and pre-owned cars. Used cellphones in particular have a very low online penetration rate which creates enormous opportunities for growth. For Zhuan Zhuan, used cellphones have always been the most important category. Zhaoliangji, which launched around the same time Zhuan Zhuan did, has been very successful over the years. The combination will not only solidify our leading position in online used cellphone B2C and C2C models, but also better position us to build a larger and more efficient ecosystem that covers more models such as C2B and B2B for used cellphones. Zhaoliangji's team as well as its offline inspection centers will integrate with Zhuan Zhuan's used cellphone team. We look forward to building our ecosystem to scale and creating future success together."
Editor's Note: At the beginning of April, 58.com announced the receipt of a preliminary non-binding proposal from Ocean Link Partners Limited to take 58.com private. Under the proposal, Ocean Link Partners would acquire all of 58.com's outstanding ordinary shares, including Class A ordinary shares represented by American depositary shares ("ADSs," each representing two Class A ordinary shares), for USD 27.5 in cash per Class A or Class B ordinary share, or USD 55.0 in cash per ADS. 58.com subsequently announced an update to this privatization proposal at the end of April, in which the group making the proposal has been expanded from Ocean Link Partners alone to a consortium including Ocean Link Partners, Warburg Pincus Asia LLC, General Atlantic Singapore Fund Pte. Ltd., and 58.com Chairman and CEO Michael Yao (Yao Jinbo).
Keywords: Zhuanzhuan Zhuan Spirit m-commerce Huang Wei Yao Jinbo handset wireless online classifieds 58.com second-hand WUBA Wanshifu Zhaoliangji accessory M&A
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