Deals of the Week: A Chinese IPO, Amazon in China and Telecom Megadeal

The past week has brought a diverse dealbook of acquisitions, share purchases and IPOs, characterised by the transfer of financing from the US to China. Business transfer agents are increasingly becoming accustomed to this deal “corridor”, as Chinese tech giants look to the US market to go public and US firms look to the lucrative Chinese market for expansion. Largely overshadowed by the upcoming IPO of e-commerce giant Alibaba, another online retailer, JD.com, has seen a successful public outing in the US. Meanwhile, Amazon has made inroads into the Chinese grocery delivery market and telecom major AT&T is buying satellite TV provider Direct-TV in a multi-billion-dollar megadeal.

JD.com tests the IPO water before Alibaba’s supersized offering

The reaction among US investors to Chinese tech firms has been successfully tested by the IPO of online retailer JD.com, which is aspiring to become China’s answer to Amazon. The company exceeded expectations for its initial IPO by raising $1.78 billion. The stock sale valued the company at $25.7 billion, a valuation higher than that of Twitter at its market debut. The number of orders for the retailer’s stock was 15 times oversubscribed. The demand signifies the growing global appetite for Chinese stock, which has remained out of bounds for investors since the rapid growth on the Asian Internet market began in the mid-2000s. The IPO result is especially impressive considering the weakened demand for tech stocks amid investors worried the industry is overheating.

Amazon enters Chinese e-grocery business

As JD.com is pursuing a more global audience, its potential future competitor is gingerly making inroads into JD’s domestic scene. Amazon has purchased a minority $20 million stake in Shanghai-based online grocery store Yummy77. The investment is Amazon’s first in a Chinese company and may pave the way for the US firm to bring its grocery business, AmazonFresh, to China. Amazon is among the many US Internet companies without a strong presence on the lucrative Chinese market. Amazon is estimated to hold a 2% share of the Chinese consumer market and the company could be going up against Wal-Mart in the Chinese grocery sector, as the US superstore giant has a controlling stake in Yummy77 competitor Yihaodian.

AT&T set to acquire DirecTV in one of 2014’s biggest deals

A period of consolidation in the cable and broadband space continues, with AT&T set to buy satellite-TV operator DirecTV for $48.5 billion. The acquisition follows rival Comcast’s acquisition of Time Warner Cable earlier this year for $45 billion. The logic behind the megadeal assumes that by incorporating DirecTV’s 20 million customers in the US, AT&T will be able to sell bundled TV, broadband and mobile deals to customers. DirecTV’s 18 million subscribers in Latin America also offer an attractive platform for continued market expansion into emerging regions for AT&T.

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