China's Meituan Seeks $10 Billion War Chest for Drones and Driverless Cars
By Joanne Chiu
China's Meituan is raising as much as $10 billion from
investors, hoping that it will be able to gain an edge on its
e-commerce rivals by spending heavily on technology allowing it to
deliver goods using drones and self-driving cars.
Meituan is one of China's most valuable tech companies. Its app
lets users order various real-world services including meals and
groceries, as well as organizing bookings for hotels, flights,
taxis and restaurants.
The Hong Kong-listed company is selling as much as $7 billion of
stock and $3 billion of convertible bonds, according to a term
sheet Monday that was seen by The Wall Street Journal. Meituan
declined to comment.
The huge capital-raising is considerably bigger than the $4.2
billion Meituan raised in its 2018 initial public offering and
suggests there is still a healthy appetite among investors for
stock in Chinese technology companies, even though shares in
Meituan and many peers have pulled back recently.
Earlier this month, Prosus NV raised $14.6 billion by selling
down a small part of its stake in Tencent Holdings Ltd., the
internet and videogaming giant.
Meituan plans to use some of the net proceeds on projects such
as researching and developing autonomous delivery vehicles, drone
deliveries and other cutting-edge technology, the term sheet
In a separate statement Monday, the company unveiled a new
generation of self-driving delivery cars that it said were smarter
and safer than previous versions, with a longer battery life and
capable of carrying heavier loads. Meituan says it has been working
on this technology for five years, and began making deliveries in a
district of Beijing last year. It plans to roll out the service to
other Chinese cities within three years.
The company is raising as much as $7 billion by selling shares
to institutional investors and to Tencent, the term sheet said.
Tencent, which owns about 7.6% of Meituan, has pledged to buy as
much as $400 million of stock. Meituan will also issue $3 billion
of zero-coupon convertible bonds due in 2027 and 2028.
Meituan had an operating loss of 2.9 billion yuan, equivalent to
$445 million, in the fourth quarter, compared with an operating
profit of 1.4 billion yuan a year ago. While revenue for the
quarter rose nearly 35% to 37.9 billion yuan year on year, Meituan
said it had made significant investments in new initiatives and
warned investors it could continue to record operating losses in
the next few quarters as it ramps up its group-buying business.
Meituan and rivals such as Pinduoduo Inc. are jostling for
market share in group buying, a fast-growing form of e-commerce in
China in which people join together to buy groceries in bulk at
Meituan's stock hit record highs in February. But the stock has
since fallen about 36% amid a broader selloff in Chinese technology
stocks that has been driven partly by concerns about a tougher
On Monday, Meituan's shares closed 0.3% lower at 289.20 Hong
Kong dollars a share. The price range for the stock offering is
HK$265 to HK$274, representing a discount of as much as 8.4%
compared with Monday's closing price.
Write to Joanne Chiu at email@example.com
(END) Dow Jones Newswires
April 19, 2021 10:03 ET (14:03 GMT)
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