Supply chain-based technology and service provider JD.com, Inc. (JD) via a subsidiary has entered into a series of agreements for the acquisition of Deppon Logistics Co.
Deppon is a logistics company, which provides an array of solutions, including Less-Than-Truckload (LTL) transportation, Full Truck Load (FTL) transportation, delivery services, and warehousing management in China.
For a total consideration of RMB 9 billion (~$1.41 billion), JD Logistics will acquire roughly 99.99% equity interest in Ningbo Meishan Baoshui Area Deppon Investment Holding Company (Deppon Holdco). Deppon Holdco holds a 66.5% stake in Deppon.
Deal structure
This transaction entails a staggered acquisition arrangement and certain closing conditions, which also include regulatory approvals.
Upon closing, Deppon Holdco will become a subsidiary of JD Logistics and its financials will be consolidated into the statements of JD Logistics. Further, subject to closing conditions and completion of proposed transactions, JD will make a mandatory general offer for all shares of Deppon at a price of RMB 13.15 (~$2.07) per share. This offer will exclude the issued and unrestricted shares of Deppon held by Deppon Holdco.
Analysts’ Take
Recently, UBS analyst Jerry Liu reiterated a Buy rating on the stock but lowered the price target to $90 from $100. Overall, the Street has a Strong Buy Consensus rating on JD.com based on 11 unanimous Buys. The average JD.com price target of $91.55 implies a potential upside of 90.77% for the stock, at the time of writing
Hedge Fund Activity
TipRanks data points that Wall Street’s top hedge funds have decreased holdings in JD.com by 1.7 million shares in the last quarter, indicating a negative hedge fund confidence signal in the stock based on activities of 21 hedge funds. Importantly, Ray Dalio’s Bridgewater Associates has a holding worth ~$186.47 million in JD.Com. Shares are down 29.8% so far this year.
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