News emerged on October 31 that a consortium headed by CITIC Group, one of China’s largest conglomerates, was in discussion with Naspers, a major shareholder of Tencent, to acquire its shares in full and win a controlling stake in Tencent.
According to Tencent‘s 2022 interim report, its largest shareholder, MIH TC, is controlled by Prosus, a wholly-owned subsidiary of South African multinational internet, technology and multimedia holding firm Naspers.
Prosus later responded, calling the report “speculative and untrue,” and writing, “The Group continues with its open-ended share repurchase programme announced in June this year which is funded by the sale of small numbers of ordinary shares in Tencent held by the group regularly and in an orderly manner. The Naspers Board and Prosus Board reiterate their continued confidence in Tencent‘s long-term prospects and continue to believe that the share repurchase programme is in the best interests of Prosus, Naspers and their respective shareholders.”
In March 2018, Naspers first reduced its holdings of Tencent by 2%, or about 190 million shares. At that time, Naspers promised not to sell further shares for at least the next three years. However, after several recent rounds of reductions, Naspers’ shareholding ratio in Tencent has dropped from the initial 46% to 27.99%.
As of October 27, Prosus still held 2,692.6 million Tencent shares, which is consistent with the number disclosed by Hong Kong Stock Exchange on September 9. This indicates that Naspers stopped reducing Tencent shares in stages for more than a month from September 9 to October 27.
However, the director of a brokerage firm’s stock sales business offered a different view in a personal comment sent to LatePost. Prosus’s holdings disclosed on October 27 are still the data as of September 2, and they do not represent the firm’s moves since September. Prosus disclosed its reductions to the HKEx in September as stipulated by the exchange, because its shareholding ratio crossed an integer mark from 28.1% to 27.99%. Therefore, Prosus likely continued to reduce its holdings in Tencent from September up until now, without notifying the HKEx until its shareholding ratio crossed an integer mark again.
Tencent‘s share price has plummeted throughout this year. As of press time, its stock price is HK$227.4 per share, up 10.6%, with a total market value of HK$2.19 trillion. However, CITIC will still have to spend more than HK$500 billion to acquire the shares held by Naspers.
CITIC, founded in 1979, is a wholly state-owned enterprise with 44 subsidiaries, and its main businesses include finance, real industry and others. As of December 31, 2021, the total assets of CITIC reached HK$10,685.5 billion, while the equity attributable to ordinary shareholders was HK$751.4 billion. In 2022, it was included in the Fortune Global 500 list for the 14th consecutive year, ranking 102nd.
It is worth mentioning that rumors previously emerged that China Mobile, a multimedia service provider through its nationwide mobile telecommunications network, might take a stake in Tencent, although this was denied by the latter.