Tencent to buy 16% of Kingsoft for $115m to expand

Updated: 2011-07-07 15:13


Tencent Holdings Ltd, China's biggest Internet company, agreed to buy a 15.7 percent stake in Kingsoft Corp for HK$892 million ($115 million) to expand in computer-security services, Bloomberg reported Thursday

Tencent will buy 111.5 million shares from Kingsoft Chief Executive Officer Kau Pak Kwan and 66.9 million shares from non-Executive Director Cheung Shuen Lung, Kingsoft said in a filing to Hong Kong's stock exchange on Wednesday. The deal is scheduled to be completed Thursday, Kingsoft said.

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The purchase builds on Tencent's leadership in China's online-games and instant-messaging markets as the Shenzhen-based company boosts spending on services including computer security and electronic commerce. Kingsoft and Tencent together account for more than 20 percent of the local market for security software, second only to Qihoo 360 Technology Co, the report said according to Morgan Stanley.

Kingsoft rose 15 percent to HK$5.77 as of 10:09 am in Hong Kong trading, after being halted on Wednesday pending the announcement. The shares earlier surged as much as 19 percent, the biggest intraday jump since April 2008.

Tencent rose 0.8 percent to HK$216.20 and has gained 28 percent this year, trailing Chinese Internet stocks including Baidu Inc and Sina Corp.

About Shenzhen

Shenzhen is located at the southern tip of the Chinese mainland on the eastern bank of the mouth of the Pearl River and neighbors Hong Kong.

The brainchild of Deng Xiaoping, the country's first special economic zone was established here by the Chinese Government in 1980. It has been a touchstone for China's reform and opening-up policy since then.