Reports

A heavy focus on ecosystem development and, increasingly, on overseas expansion has fueled aggressive M&A strategies among China's dominant Internet companies: Baidu, Alibaba, Tencent, JD.com, and Xiaomi (collectively, "BATJX"). BATJX acquisitions previously comprised mainly Internet and mobile service firms, but have expanded in scope to include areas such as offline retail, logistics, hardware, financial services, TV and film production, newspaper publishing, property management, sports teams, and cosmetics brands. The BATJX M&A race continues to change the competitive positioning of each of the acquiring companies, and is also providing many target companies a lucrative, early exit option compared to the longer time frame and less certain prospects of an IPO.

To help investors and tech industry enterprises better understand what acquisitions each of the BATJX firms has made over the last 24 quarters, how these deals fit in to each acquirer's ecosystem strategy and improve its overall competitiveness, and what firms, based on the remaining holes in each Baidu, Alibaba, Tencent, JD.com, and Xiaomi's respective ecosystems, are most likely to be the target of future acquisitions, Marbridge has developed the Baidu, Alibaba, Tencent, JD, and Xiaomi M&A Matrix.

The Q1 2018 edition of the Matrix covers all major confirmed and rumored BATJX acquisitions (both minority and majority stakes) revealed over the 24-quarter period ending March 31, 2018, as well as a selection of particularly significant M&A deals preceding that period, in Excel (read-only) format. Note that the Q1 2018 issue of the Matrix, for reference, continues to cover Qihoo 360. For each portfolio firm, the Matrix provides the following information:

• Company Name
• Sector
• Business Scope
• Country (if not mainland China)
• Ticker Symbol (if applicable)
• Stake Acquired (where known)
• Acquisition Price (where known)
• Date of Acquisition / Rumor of Acquisition
• Type of Investment (e.g. Series A, pre-IPO Funding, JV, Post-IPO Stake)
• Reference Article in Marbridge Daily

The Baidu, Alibaba, Tencent, JD, and Xiaomi M&A Matrix covers approximately the following number of deals (multiple investments in the same target company are detailed separately, but here are counted as a single deal):

• Baidu: 140
• Alibaba: 330
• Tencent: 350
• JD.com: 95
• Xiaomi: 170
• Qihoo 360: 60

The Matrix also includes acquisitions made not directly by a BATJX company, but instead made independently by one of their CEOs/Chairmen or an investment fund controlled by one of their CEOs/Chairmen (e.g. Xiaomi CEO Lei Jun's Shunwei Capital or Alibaba Chairman Jack Ma's Yunfeng Capital), and key joint ventures.

During Q1 2018, Tencent went into acquisition overdrive, with nearly double the number of known deals of the next most active among BATJX. Alibaba was the second most active in making new acquisitions, Xiaomi/Shunwei, Baidu, and JD each announced a significant number of new deals, and Qihoo, following official completion of its backdoor listing on the Shanghai Stock Exchange, made a handful of strategic investments. While acquisitions spanned a variety of different sectors, especially noteworthy areas included entertainment media and e-commerce, followed by financial services, online literature, enterprise services, and healthcare, with multiple deals also announced in smart devices, gaming, education, real estate, artificial intelligence, logistics, and transportation.

The ratio of overseas deals to total deals during Q1 2018 remained roughly the same as that in the previous two quarters, with approximately one-sixth of the new deals covered in this edition of the Matrix comprising investments in overseas firms, spread relatively evenly between Southeast Asia, North America, India, and Europe.