Alphabet Inc. (NASDAQ: GOOG) is acquiring 27million shares of JD.com Inc. (NASDAQ: JD) at a price of $40.58 per ADS (each ADS is equal to two shares), a premium to yesterday’s closing price of $39.18.
This deal will provide JD with cash to expand its logistics capabilities, and the two companies will work on initiatives that combine Google technology with JD’s existing infrastructure.
This $550 million investment provides validation to JD shareholders, and adds to the impressive list of firms backing the company, including Tencent (OTCMKTS: TCEHY), who owns a 15% stake.
JD stock quickly lost 10% in value since the partnership was announced, as concerns regarding a potential trade war have kick started market volatility. However, as the most trusted e-commerce website in China, JD is positioned to become China’s Amazon (NASDAQ: AMZN). Investors with a moderate appetite for risk will likely be rewarded for their patience.
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The O&G Research Team publishes insights on the global markets. Our research scope ranges from the US to China.
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