Meituan shares tank 9% after Tencent reportedly plans to divest stake

Meituan is one of the largest food delivery companies in China. Delivery drivers can be seen running around Chinese cities. Tencent first backed rival Dianping in 2014, which merged with Meituan to form the current company.

Ngoc Gao | AFP | beautiful pictures

Shares of Chinese food delivery giant Meituan 9% off on Tuesday after Reuters report Tencent is planning to sell the majority of its $24 billion stake in the company.

Tencent, which owns a 17% stake in Meituan, is planning to appease domestic regulators and cash in on its eight-year-old investment, Reuters reported, citing four sources familiar with the matter. this problem.

A spokesperson for Tencent said it “does not comment on market speculation” when contacted by CNBC. Meituan was not immediately available for comment.

Shares of Tencent closed 0.8% higher in Hong Kong.

Tencent, the company that owns China’s No.1 Messaging App WeChatis looking to start selling shares this year if market conditions are favorable, Reuters reported.

A source with knowledge of the matter told CNBC that Tencent has no plans to sell its Meituan stake at the moment.

Tencent invested in a company called Dianping in 2014, then merged with Meituan a year later to form the current company.

Investments by Chinese technology companies have come under intense scrutiny as part of Beijing’s sweeping crackdown on the country’s giants. Chinese authorities have sought to curb the power of tech giants through tighter regulation in areas ranging from antitrust to data protection.

Reuters reports that part of Tencent’s reasoning behind the divestment of its shares in Meituan is causing regulators to worry about tech giants favoring companies closely related to people’s livelihoods.

Over the past few months, Tencent has divested in some of its biggest investments.

In December, Tencent said it would divest most of its shares in China’s second largest e-commerce company,

In January, Tencent raised 3 billion USD through the sale of some of its shares in Singapore-based e-commerce and gaming company Sea.

Tencent’s stock sales come at a time Growth slows for Chinese tech giantswas affected by the recession of the world’s second largest economy and stricter regulation of the domestic game sector. Tencent is the largest game company in China.

Read the full Reuters report here.

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