On April 4th, Hailian Jinhui Technology Co., Ltd. (referred to as “Hailian Jinhui”) announced on the Shenzhen Stock Exchange that on April 3rd, they signed a “Equity Transfer Agreement” with Tianjin Tongrong Electronic Commerce Co., Ltd. (referred to as “Tianjin Tongrong”). The company plans to transfer 100% equity of its wholly-owned subsidiary, Linkage Advantage Technology Co., Ltd. (referred to as “Linkage Advantage”), which holds Linkage Advantage E-commerce Co., Ltd. (referred to as “Linkage Commerce”), to Tianjin Tongrong.
The price for this equity transfer is: a benchmark transfer price of 750 million yuan + the net asset amount adjusted based on the combined financial statements of Linkage Commerce on the equity transfer date after deducting agreed items and adjusting for other items.
Hailian Jinhui stated that after the completion of this transaction, Linkage Commerce will no longer be included in the company’s consolidated financial statements. After completing the equity transfer of Linkage Commerce, Tianjin Tongrong plans to merge Linkage Commerce through its wholly-owned subsidiary, Wuhan Hezhong Yibao Technology Co., Ltd. Wuhan Hezhong Yibao Technology Co., Ltd. is the subject of the “Douyin Payment” license and will provide support for Douyin Group’s offline transaction business scenarios after the completion of this transaction.
In response, the person in charge of Douyin Payment stated to the media that the purpose of this transaction is to support offline transaction scenarios such as life services.
Public information shows that Wuhan Hezhong Yibao Technology Co., Ltd. was established in 2012 and obtained the “Payment Business License” issued by the People’s Bank of China in 2014, becoming a licensed Internet payment company. On August 28, 2020, ByteDance completed the acquisition of Wuhan Hezhong Yibao Technology Co., Ltd., obtaining the payment license.
On January 19, 2021, Douyin Payment was officially launched in the Douyin app. When settling shopping transactions in the Douyin app, in addition to Alipay and WeChat Pay, an entrance for “Douyin Payment” was added. Currently, Douyin Payment supports the binding of multiple bank cards, including Agricultural Bank of China, China Construction Bank, Bank of China, Postal Savings Bank of China, Bank of Communications, and China Merchants Bank, among others.
Industry insiders point out that if the transaction to acquire Linkage Commerce can be completed smoothly, Douyin Payment will complement its bank card acquiring business license. However, both the transaction and the merger require approval from the People’s Bank of China, and there is uncertainty about the approval results and the time for final decisions, as stated in Hailian Jinhui’s announcement.