Bitauto Holdings Limited, a leading provider of Internet content and marketing services for China’s fast-growing automotive industry, Tencent Holdings Limited, leading provider of comprehensive Internet services in China, Baidu, Inc. leading Chinese language internet search provider, and JD.com, Inc. leading online direct sales company in China, today jointly announced that they have entered into definitive agreements under which Tencent, Baidu and JD.com each agree to invest $50 million in Bitauto.
Bitauto also announced today that pursuant to definitive agreements entered into by and between Bitauto and PA Grand Opportunity Limited (PAG), the Company agrees to issue convertible bonds (CBs) to PAG and/or its affiliates in an aggregate principal amount of up to $150 million.
The Company intends to use the proceeds from the new share issuance and the CB issuance for general corporate purposes.
Once closed both transactions, Tencent, Baidu, JD.com and holders of the CBs will hold 7.1%, 3.2%, 23.5% and 8.2%, respectively, of the Company’s outstanding shares on a fully diluted basis taking into effect the new issuance and the conversion of the CBs at the initial conversion price.
Share purchases
Tencent, Baidu and JD.com each agree to purchase 2,471,577 newly issued ordinary shares of Bitauto at U$20.23 per share, corresponding to US$20.23 per American depositary share of Bitauto (ADS), each representing one ordinary share of the Company. The purchase price represents the average volume weighted closing trading price of Bitauto’s ADSs for the five trading days prior to the signing of the definitive agreements. The transaction is subject to customary closing conditions.
The Bonds deal
The CBs will be due in five years from the date of issuance and will have an interest rate of 2.00% per annum. At any time after three months of the CBs issuance, at the option of the holders, the CBs are convertible into ordinary shares or ADSs of the Company. The initial conversion price will be US$23.67 per ADS. Mr. William Li, chief executive officer and chairman of Bitauto will indirectly purchase a portion of the CBs through PAG under a total return swap arrangement with PAG.
William Li commented, “We are delighted to announce today the strengthening of our strategic partnership with JD.com andTencent, and the establishment of a new partnership with Baidu, the leader in Chinese language online search. We are also pleased to welcome PAG, a leading regional private investment firm, as an important investor. My personal participation in this transaction is a further testament to management’s strong confidence in Bitauto’s future development.”
Bitauto services
Bitauto’s advertising and subscription business offers advertising and digital marketing solutions to automakers and automobile customers in China. Bitauto provides a variety of advertising services mainly to automakers through its bitauto.com and taoche.com websites, which provide consumers with up-to-date new and used automobile pricing and promotional information, specifications, reviews and consumer feedback.
Bitauto also offers subscription services via its EP platform which provides web-based and mobile-based integrated digital marketing solutions to automobile customers in China.
The platform enables dealer subscribers to create their own online showrooms, list pricing and promotional information, provide dealer contact information, place advertisements and manage customer relationships to help them reach a broad set of purchase-minded customers and effectively market their automobiles to consumers online.
In 2014, Bitauto began providing automobile customers with transaction services on its EP platform, including automobile transaction, CRM and online automotive financial platform services, which are intended to optimize the automobile purchase experience and facilitate completion of transactions.
Bitauto’s digital marketing solutions business provides automakers with one-stop digital marketing solutions, including website creation and maintenance, online public relations, online marketing campaigns and advertising.
Li added: “Through our cooperation over the past year with JD.com and Tencent, China’s leaders in world-class e-commerce, social media and big data, we have gained tremendous momentum in making Bitauto the industry leader in online automobile transactions. Through our new partnership with Baidu, we expect to leverage its leadership in mobile and desktop online search, big data and transaction services platforms for additional strategic advantages as we continue to create the industry leading new and used car purchasing experience for customers in China.”
