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Tencent Music Entertainment Group has officially announced its proposed acquisition of prominent Chinese audio company Ximalaya Inc, confirming earlier reports about the deal.
The transaction, outlined in an SEC document filed today (June 10, 2025), will see Ximalaya become a wholly-owned subsidiary of TME upon closing.
Reuters reports that the deal is worth about $2.4 billion in cash and stock, with Ximalaya shareholders receiving $1.26 billion in cash plus TME shares representing approximately 5.2% of the company’s total outstanding shares.
Additionally, founder shareholders will receive TME shares worth up to 0.37% of the company’s total share count, to be distributed in tranches following the deal’s completion.
TME, which trades on both the New York Stock Exchange under ticker TME and the Hong Kong Exchange, operates China’s most popular music streaming services, including QQ Music, Kugou Music, and Kuwo Music.
The company also runs social entertainment platforms like WeSing and various live streaming services.
The acquisition of Ximalaya represents a strategic expansion for TME into the growing audio content market across podcasts, audiobooks, and other spoken-word content.
The acquisition provides access to new content categories and revenue streams as competition intensifies in the global music streaming market.
The acquisition could potentially position TME to more directly compete with global streaming giants like Spotify, which has been aggressively expanding beyond music into podcasts and audiobooks in recent years.
According to a listing application filed last year, Ximalaya boasted 303 million monthly active users as of 2023. The audio platform had previously filed for an IPO in 2021 but delayed those plans.
The transaction remains subject to regulatory approvals and other standard closing conditions. As part of the integration process, Ximalaya will undergo restructuring of certain existing businesses, though specific details were not disclosed in the announcement.
Both companies will continue operating independently until the deal closes, with final completion expected pending regulatory review by Chinese authorities.
Ximalaya’s current shareholders reportedly include TME’s majority-parent company, Tencent Holdings, plus Baidu and Sony Music Entertainment.
As noted in April, an SEC filing reviewed by MBW, Sony Music acquired 4.6 million Series E-2 preferred shares in Ximalaya for a consideration of USD $50 million in 2020.
In Q1 2025, TME reported revenue of RMB 7.36 billion ($1.01 billion), with music streaming subscriptions generating RMB 4.22 billion ($581 million), representing a 16.6% increase year-over-year.
The company’s paying user base grew 8.3% to 122.9 million users, while average revenue per paying user rose 7.5% to RMB 11.4 ($1.57), driven largely by the success of its premium “Super VIP” subscription tier.
TME’s Super VIP tier, which costs five times more than standard subscriptions, has proven particularly successful with features like premium audio quality used by about 50% of SVIP subscribers, along with album discounts, special badges, early access to live events, and merchandise.
The company has previously noted that long-form audio content “boosted SVIP retention,” with an audio adaptation of The Grave Robbers’ Chronicles becoming the fastest series to surpass 10 million streams on TME’s platforms, highlighting the strategic value of expanding into other audio formats through the Ximalaya acquisition.
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