Apr 20, 2015 05:51 PM

China's Two Largest Online Classified Listing Sites Announce Merger

(Beijing) – A friendly merger between classified advertising websites Inc. and has been heralded as a new phase of growth for the two companies' online-to-offline retail platforms.

The New York-listed said it will offer 17 million new shares and US$ 412.2 million in cash to acquire a 43.2 percent stake in the rival The merger boosted the share price of to US$ 70.5 per share, up 4.34 percent, on April 17.

The new company created by the merger will still see the two firms independently operate their own brands, websites and teams, according to a statement of on April 17. founder Yao Jinbo and Ganji founder Yang Haoyong will be appointed co-chief executives of the new firm.

The social networking firm Tencent Holdings Ltd. will additionally invest about US$ 400 million in to help complete the advertising company merger, and Tencent will hold a 25.1 percent stake of, said the statement.

In 2014, Tencent invested US$ 736 million to purchase a 19 percent stake in

Yang said the merger of the two companies, both established in 2005, will create a new company with a market value of more than US$ 10 billion.

He said the two companies would have continued to compete against each other for another 10 years if the companies had not entered the online-to-offline (O2O) business, where the two companies have little overlap in their market presence.

Last year, set up a subsidiary to provide door-to-door services such as house-cleaning and home moving. It also purchased the driving school information website, and, a real estate industry website.

Ganji has expanded in the online second-hand vehicle business with its subsidiary Ganji Haoche, which currently has a presence in 12 cities.

Yao said the merger will help the new company gain a leading position in the second-hand home business, given that, and ranked among the top five players in the sector last year.

The tie-up between and Ganji comes amid large tech sector consolidation moves which have triggered debate on market share. In February, the country's two leading taxi-hailing apps Didi Dache and Kuaidi Dache agreed to a merger. Online video providers and merged in 2012.

You Yunting, a lawyer at Shanghai DeBund Law Firm, said the merger is not expected to constitute a monopoly because the companies have competitors in each market segment.

(Rewritten by Guo Kai)

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