TME(US:TME) Bei Ke Cai Jing·2025-06-12 01:18Core Viewpoint - Tencent Music Entertainment Group has signed an acquisition agreement to fully acquire Ximalaya for a total consideration of approximately $2.9 billion, which includes $1.26 billion in cash and shares, marking a significant expansion into the long audio content sector [2][8]. Group 1: Acquisition Details - The acquisition includes a cash payment of $1.26 billion and up to 5.1986% of Tencent Music's Class A ordinary shares, with additional shares for Ximalaya's founding shareholders [2]. - The total estimated acquisition cost is around $2.9 billion, equivalent to approximately 20.8 billion RMB [2]. - Ximalaya will undergo a business restructuring related to the acquisition, maintaining its brand, product independence, core management team, and strategic direction [3]. Group 2: User Metrics and Market Position - Tencent Music has experienced a decline in monthly active users, with figures dropping from 620 million in 2022 to an estimated 570 million in 2024 [5]. - In contrast, Ximalaya reported an average monthly active user base of 302.6 million in 2023, with a steady increase in paid users from 14.9 million in 2021 to 15.8 million in 2023 [6]. - Tencent Music's paid user numbers for online music services are projected to grow from 84.2 million in 2022 to 117.6 million in 2024, indicating potential for revenue growth [6]. Group 3: Strategic Implications - The acquisition is seen as a strategic move for Tencent Music to enhance its presence in the online audio sector, diversifying beyond its core music business [8]. - Analysts suggest that the integration of Ximalaya will allow Tencent Music to leverage its content and technology capabilities, potentially leading to improved user retention and monetization opportunities [9][10]. - The long audio sector remains uncertain in terms of profitability, with both companies needing to address this challenge post-acquisition [12].