(Bloomberg) — JD.com Inc. is set to acquire a controlling stake in China Logistics Property Holdings Co. in a deal valuing the firm at about HK$15 billion ($1.9 billion), according to people familiar with the matter.
The Chinese e-commerce giant would pay about HK$4.35 per share to buy stakes held by major holders China Logistics Chairman Li Shifa and RRJ Capital, the people said. The deal could be announced as soon as Friday, they said, asking not to be identified as the information is private. JD.com will be required to launch a mandatory tender offer for China Logistics’ outstanding shares, as the combined equity holding will cross the 50% threshold, one of the people said.
The proposed offer price represents a premium of about 7% above the company’s closing price Wednesday of HK$4.05. China Logistics suspended trading in its shares Thursday pending a takeover code notice.
Representatives for China Logistics and JD.com did not immediately respond to requests for comment.
The deal reflects the increasing competition to dominate e-commerce in China, with assets like warehouses in high demand from firms vying to capitalize on the rising prosperity of the country’s consumers.
The Hong Kong-listed firm said in a filing Aug. 27 that Li was in discussions about a possible sale of 26% of the company, confirming an earlier Bloomberg News report.
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Chinese companies have been investing heavily in warehouses and logistics infrastructure, as the coronavirus pandemic accelerated the shift to e-commerce. A boom in online groceries, fueled by the rise of so-called community group buying, has also spurred the need for cold-chain logistics to deliver fresh fruits, vegetables and meats to far-flung parts of the country.
JD Logistics Inc., the e-commerce giant’s delivery arm, has been growing at a steady clip, increasing revenues by 54% in the first half, as it stepped up spending on the business. The unit, which went public earlier this year, currently operates more than 1,200 warehouses, executives said last week on a post-earnings call.
Bank of America Corp. advised JD.com on the deal, while UBS Group AG advised the sellers, Bloomberg News has reported.
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