Introduction
Dalian Wanda Group Co., a prominent conglomerate engaged in various industries from tourism to retail, is reportedly in talks with potential buyers, including ByteDance Ltd., for the sale of its Chinese payments unit. The move is an attempt by Wanda to address liquidity concerns and strengthen its financial position. The potential sale of the digital payments license, acquired in 2014 through the purchase of payments firm 99Bill.com, is estimated to be around 1 billion yuan ($141 million). However, negotiations may impact the final sale price, according to undisclosed sources familiar with the matter.
Wanda's Liquidity Challenges
Wanda, led by billionaire Wang Jianlin, is currently facing challenges in China's credit market. The company must repay approximately 30 billion yuan if it fails to list its mall operation this year. Unfortunately, the mall unit's initial public offering application has lapsed for the third time in April, exacerbating the pressure on the conglomerate. As a result, Wanda has undertaken various measures to alleviate its financial strain, including downsizing certain business units, staff reductions, and potentially selling up to 20 shopping malls in China. In May, Wanda initiated talks with major Chinese banks regarding loan relief.
Digital Payments License as an Asset
Wanda's digital payments license carries significant value due to the data and access it provides to a large user base, many of whom signed up for the service through Wanda's malls. The acquisition of the license in 2014 positioned Wanda as one of the early pioneers in China, alongside Alipay, to secure such a permit. ByteDance's Douyin Group, which operates the popular short-video app Douyin, confirmed preliminary discussions with Wanda regarding the sale but did not provide further details.
ByteDance's Interest and Industry Trends
ByteDance, the parent company of Douyin, is believed to be interested in acquiring Wanda's payments unit to strengthen its presence in the digital payments landscape. ByteDance previously acquired a similar permit in 2020, while rival Kuaishou secured one through the purchase of Easylink Payment Co. This indicates the growing importance of digital payment licenses in China, with such permits being tightly regulated by the government.
Conclusion
Dalian Wanda Group's negotiations for the sale of its Chinese payments unit underscore the conglomerate's efforts to improve its liquidity amidst mounting financial pressure. The potential sale to ByteDance and other prospective buyers, if successful, could provide Wanda with a much-needed cash infusion. Meanwhile, the interest from ByteDance highlights the significance of digital payment licenses and the increasing competition within China's digital payment industry. As these discussions remain in the preliminary stages, it is uncertain how the final deal will unfold and whether it will indeed help alleviate Wanda's liquidity crunch.
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