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Chinese classified ad site to buy 43 pct of rival Ganji-Reuters

(Reuters) – Chinese classified advertising site Inc said on Friday that it had agreed to buy a 43.2 percent stake in rival, marking further consolidation in the mainland’s hot technology sector.

In February, China’s two leading taxi-hailing apps Didi Dache and Kuaidi Dache agreed to merge, creating a $6 billion company.

New York-listed, dubbed the Craigslist of China and backed by Tencent Holdings Ltd, said it would issue 34 million new ordinary shares and pay $412.2 million in cash to acquire the stake in At the current market price, the deal is valued at $1.6 billion, according to Reuters calculations.

A person with direct knowledge of the matter however said the acquisition price was about $1.2 billion. declined to comment on the acquisition value. is buying the stake from shareholders including private equity firms Tiger Global Management, Carlyle Group and CITIC Capital, venture capital firms Sequoia Capital, Nokia Growth Partners and’s employees and management, said the person, who was not authorised to speak publicly about the matter.

Boutique investment firm China Renaissance advised the selling shareholders, that person said.

At the same time, social networking firm Tencent will invest about $400 million in, leaving its stake at roughly 25.1 percent, said. Both deals are expected to close “within a few days”, the advertising site said in a statement on Friday.

Last year, Tencent, China’s biggest social networking and online entertainment firm, bought a 20 percent stake in for $736 million, as part of a drive to boost its e-commerce business.

The deal with is aimed at integrating the two businesses to decrease costs while bolstering revenues, CEO Michael Yao was quoted as saying in the statement.

The firms will operate their own brands, websites and teams, according to the statement.

“We have seen and continue to see the mobile internet enabling a transformative opportunity in the classified industry,” said CEO Mark Yang in the statement.

In a separate letter to employees, the authenticity of which was confirmed by a spokeswoman, CEO Yao was quoted as saying that the two companies would merge and he and’s Yang would be co-chief executives of the new firm.

A Tencent spokeswoman declined to comment on its investment in A representative for was not available for immediate comment.