China's second-largest e-commerce company, Tencent on Thursday announced that it is giving away USD 16 billion of its stake in JD.com to stay on the right side of Beijing.
This surprising retreat by Tencent comes at a time when the country's internet giants are under intense pressure from Beijing, reported CNN.
Beijing has been cracking down on tech giants to rein in their growing power and influence.
Tencent (TCEHY) plans to distribute more than USD 16 billion worth of its stake in JD.com (JD) to its shareholders as a one-time dividend, the Chinese gaming and social media giant said in a stock exchange filing.
The 457 million shares that Tencent plans to give out represent 86.4 per cent of its stake at JD.com, or 14.7 per cent of JD.com's total issued shares, reported CNN.
Currently, Tencent controls 17 per cent of JD.com. After the distribution, its stake will drop to 2.3 per cent, which means it will no longer be JD.com's largest shareholder.
The move may reduce Tencent's "dominance" in the market and "is potentially an attempt to shift towards fairer competition, as well as to be more in line with the agenda for China authorities," said Yeap Jun Rong, market strategist for IG, in a research note.
As part of the deal, Tencent President Martin Lau will step down as a director of JD.com, according to the filing, reported CNN.
For the past year, China has increased scrutiny of the tech industry, published detailed rules aimed at tackling unfair competition, slapped companies with massive fines, and demanded that some firms completely overhaul their businesses.
( With inputs from ANI )
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor