Phoenix New Media announces strategic investment in Tadu
Phoenix New Media announced that it has entered into an agreement with Telling Telecommunication, the sole shareholder of Beijing Yitian Xindong Network Technology, to acquire 25.5% equity interests in Yitian Xindong for an aggregate purchase price of RMB144M, subject to certain price adjustment mechanisms based on Yitian Xindong's operating and financial performance in 2019 and 2020. Before the Acquisition, Yitian Xindong is a wholly owned subsidiary of Telling Telecom, which is listed on the main board of the Shenzhen Stock Exchange. Yitian Xindong owns the mobile application Tadu, a leading online reading application in China that currently has more than one million daily active users. Concurrently, Telling Telecom also agreed to transfer another 25.5% equity interests in Yitian Xindong to Shenzhen Bingruixin Technology. Bingruixin will grant an option that will allow the Company to acquire the 25.5% equity interests from Bingruixin for RMB144M, subject to certain price adjustment mechanisms based on Yitian Xindong's operating and financial performance in 2019 and 2020. Before the Company exercises such option, Bingruixin agreed to entrust voting rights with respect to the 25.5% equity interests in Yitian Xindong to the Company prior to March 15, 2019. Because of the Voting Rights Entrustment, the Company expects to be able to consolidate Yitian Xindong upon completion of the Acquisition. However, if the Company explicitly renounces the Call Option or does not exercise the Call Option before March 15, 2019, both the Call Option and the Voting Rights Entrustment will automatically expire.