JD.com to Subscribe to GOME’s $100 Million Convertible Bond

E-commerce platform JD.com (Source: JD.com)

On the evening of May 28, Chinese electrical appliance retailer GOME Retail (0493.hk) announced that it had landed a strategic cooperation with e-commerce platform JD.com (NASDAQ: JD). JD.com announced that it would subscribe to a $100 million convertible bond issued by GOME overseas, with the initial conversion price of HKD 1.255 per share, a 38% premium to GOME’s closing price on May 28.

GOME Retail has just received another strategic investment from Pinduoduo, which recently replaced JD.com to become the second-biggest e-commerce platform in China following Alibaba’s Taobao. After joining forces with two e-commerce giants, GOME Retail will likely carry online and offline integration forward to compete directly against the Alibaba-Suning union.

SEE ALSO: Pinduoduo Makes Strategic Investment in GOME, China’s Leading Electronics Retailer

If all conversion rights are exercised, JD.com will acquire about 620 million shares of GOME’s new shares, accounting for about 2.8% of the issued share capital after the expanded convertible shares issued by GOME. The two sides will step up cooperation in procurement, marketing, logistics, post-sales service and franchised stores.

According to the agreement, GOME will connect its “new retail infrastructure” including supply chain, medium and large-size good logistics, warehouse distribution, service system and more than 2,600 offline stores nationwide to the JD.com platform. GOME’s more than 160,000 community members as well as livestream resources will also be available for JD.com as retail assets.

Under the impact of the COVID-19 pandemic, the retail consumption market was shrouded in gloom. Merchants and platforms placed great expectations on “618”, a mid-year shopping festival driven by major e-commerce players. Alibaba, JD.com and Suning had said they would invest tens of billions of yuan in subsidies, in an attempt to join forces with merchants to stimulate consumption.