Investing.com -- Tencent Music Entertainment Group (NYSE:TME) shares rose 5.4% on Tuesday following news that the company will acquire Chinese podcast platform Ximalaya in a $2.4 billion cash-and-stock transaction. The deal, aimed at positioning Tencent Music as a dominant force in China’s online audio sector, mirrors a broader industry shift toward diversified audio services, in line with global peers such as Spotify (NYSE:SPOT).
According to a June 10 filing with the Securities and Exchange Commission, Tencent Music signed a definitive Agreement and Plan of Merger to acquire Ximalaya, pending regulatory approvals and customary closing conditions. Upon closing, Ximalaya will become a wholly owned subsidiary of Tencent Music, significantly expanding its footprint in China’s rapidly growing podcast market.
Ximalaya, one of the country’s most popular audio platforms, boasts 303 million monthly users and serves as a major destination for podcasts, audiobooks, and livestream content. The merger, if finalized, would instantly elevate Tencent Music’s user base and deepen its content offerings beyond music.
The transaction includes $1.26 billion in cash and an equity component comprising Tencent Music Class A ordinary shares, representing up to 5.5686% of the Company’s total issued and outstanding shares before closing. A portion of those shares, 0.37% of the total, will be distributed to Ximalaya founder shareholders post-closing, subject to conditions outlined in the agreement.
Ximalaya will also undergo a restructuring of certain existing business units before the deal is completed, though full details of that process were not disclosed. Tencent Music emphasized that the restructuring and integration would support long-term synergistic value creation.
The acquisition reflects Tencent Music’s ongoing effort to evolve from a music-streaming platform to a broader digital audio enterprise. As competition rises and subscription growth slows in traditional streaming, players are increasingly looking to podcasting and user-generated audio to deepen engagement and create new monetization channels.