Credit: CFP

TMTPOST — Tencent Music Entertainment Group ( NYSE: TME; HKEX: 1698 ) announced late Tuesday that it has signed a definitive agreement to acquire Ximalaya Holdings, one of China's largest online audio platforms, in a deal valued at approximately $1.26 billion in cash plus Tencent Music shares.

The acquisition package includes $1.26 billion in cash alongside up to 5.2% of Tencent Music's Class A ordinary shares. Additionally, Ximalaya's founding shareholders are set to receive up to 0.37% of Tencent Music shares post-closing, subject to terms outlined in the agreement.

The deal remains subject to customary closing conditions, including regulatory approvals such as antitrust review.

Ximalaya, launched in 2012 and one of the pioneers in China's online audio market, boasts over 300 million average monthly active users as of 2023, with its mobile app ranking number one among Chinese audio apps by monthly active users. The platform commands around 25% of China's online audio revenue market share.

Historically focused on user-generated content, Ximalaya has pivoted toward professionally generated content ( PCG ) , solidifying its leadership in long-form audio including audiobooks and podcasts.

Despite several attempts at an initial public offering ( IPO ) — including filings with the U.S. SEC and Hong Kong Exchanges — Ximalaya has yet to successfully go public. The acquisition by Tencent Music, which is Ximalaya's largest institutional shareholder through subsidiaries holding roughly 5.3% stake, signals a strategic consolidation in China's growing but competitive audio sector.

Tencent Music, primarily known for its dominance in online music streaming, views the acquisition as a key step to broaden its footprint in the broader online audio landscape beyond music. Long-term, the company aims to leverage Ximalaya's rich audio content portfolio, including podcasts and audiobooks, to diversify revenue sources and capture emerging audio consumption trends.

Tencent Music's latest quarterly results reflect solid growth with Q1 2025 revenue reaching 7.36 billion   yuan   ( approx. $1.1 billion ) , an 8.7% year-over-year increase. Adjusted net profit grew 22.8% to RMB 2.23 billion, driven by a 15.9% rise in online music service revenue and an expanding base of 122.9 million paying users.

Industry analysts note that while China's audio market has been relatively stable, recent years have seen intensified competition from niche podcast platforms like Xiaoyuzhou ( Little Universe ) , which have carved out loyal audiences with original content and community-driven experiences.

Ximalaya's strong brand and Tencent Music's deep pockets are expected to create a formidable player in China's evolving audio entertainment space, where content differentiation and user engagement remain critical competitive factors.