Social media company Momo agreed today to acquire China-based social engagement platform Tantan for about $760m, allowing media group Bertelsmann and social network operator YY to exit.
The transaction will consist of $601m in cash and 5.3 million newly issued shares of YY that would equate to $162m based on its closing price on Nasdaq yesterday. The deal would give Tantan’s shareholders a 2.7% stake in Momo.
Tantan runs a social meeting app that operates through a swipe-left-or-right mechanism that can be used to make platonic or romantic connections.
The platform had 6 to 7 million active users as of November 2017 according to a report in Technode, and will continue to operate under its own brand post-acquisition. The deal is expected to close in the second quarter of 2018.
The company had raised $120m since being founded in 2015, having initially received $5m from Bertelsmann subsidiary Bertelsmann Asia Investments and venture capital firm Vision Plus Capital in early 2015.
VC firms Kleiner Perkins Caufield & Byers and DCM Ventures, investment firm GX Capital and private equity firm LB Investment provided $13m for Tantan’s series B round later the same year.
Tantan added $32m from LB, Vision Plus and investment firm DST Global in mid-2016, before YY led its $70m series D round in June 2017.
Yu Wang, Tantan’s chairman and chief executive, said: “Momo and Tantan have their own strengths in their respective markets and among targeted customers.
“The acquisition is a critical strategic upgrade to cover a greater range of user demographics and needs, and build up a larger social networking market through complementary businesses and strategic synergy. We are very confident in our future development.”