Nasdaq-listed Momo is funding the acquisition with $601 million in cash and 5.3 million newly issued shares, according to a statement from Momo on Friday. Momo was valuing Tantan at $735 million in total, according to people familiar with the matter, asking not to be identified because the matter is private.
China’s worsening male-female ratio has spurred an explosion in online dating. Momo, which started out as an app that helped young people find hook-ups, has been trying to clean up its image in past years, expanding into live-streaming and social media. That opened up opportunities for smaller competitors such as Tantan, though the acquisition will now help Momo cement its market position and create a more dominant player.
Momo, which had 94.4 million active users in the September quarter, is appropriating more than half of its cash reserves for the deal and said Tantan will operate independently. Tantan says on its website it’s brokered more than 3 billion matches online.
Tantan, which loosely means “cast around” or “search,” counted live-streaming giant YY Inc., DST and Genesis Capital as backers. All previous shareholders will unload their stock via the deal, the company said. China Renaissance acted as adviser of the transaction.
YY, a key competitor to Momo in the live-streaming space, made an unsuccessful attempt to acquire Tantan last year, but didn’t try to block the deal this time, a person familiar said.
Yuffie Fu, an investor relations director for YY, didn’t immediately respond to an emailed query seeking comment.