(Yicai Global) March 14 -- Shares in Deppon Logistics surged by the exchange-imposed limit today after the leading Chinese less-than-truckload delivery service provider said that the firm’s owner and persons acting in concert have agreed to transfer all their shares to a unit of JD.com giving the e-commerce giant a majority stake and a bigger footprint in the small cargo haulage sector.

Deppon’s share price [SHA:603056] jumped 10 percent to trade at CNY13.93 (USD2) as of 11:30 p.m. China time. It is the first day of trading in more than half a month after the stock was suspended for restructuring.

JD Zhuofeng will hold a 66.5 percent stake in Deppon once the transaction is complete, Shanghai-based Deppon said on March 12.

JD.com will also make a tender offer to all outstanding shareholders who hold an aggregate 26.9 percent equity at a price of CNY13.15 (USD2) per share, it said. The eventual aim is to take the logistics firm private.

JD.com did not disclose the amount of cash it is going to pay the majority shareholders, but based on the CNY13.15 per share price tag and the amount of outstanding shares it is offering to buy from existing investors, it can be estimated that JD.com values the logistics firm at about CNY13.5 billion (USD 2.1 billion).

Deppon, which was once a leader in shared truckload deliveries in the country, has seen its market share slide in recent years, industry insider Yang Daqing told Yicai Global. This is because it has failed to establish a significant presence in the express delivery sector and it is facing stiff competition in its core LTL business, he said.

However, Deppon’s strengths in small cargo loads are just what JD.com is looking for. The Beijing-based firm already runs one of the country’s biggest delivery companies JD Logistics but its advantages in hauling bigger items are relatively weak. Deppon, which was set up 25 years ago, operated over 2,000 trunk routes, 30,000 outlets and 140 warehouses as of the end of last June.

Becoming part of the JD.com empire will give Deppon a stable source of business so it is a win-win situation, Yang said. Certainly business has been bad. According to its latest earnings forecast released at the end of January, Deppon is expecting net profit to plunge by as much as 87 percent last year from 2020 to CNY186 million (USD29.3 million).

There has recently been a new round of acquisition and restructuring in China’s express delivery sector with the takeover of Kerry Logistics Network by SF Holding and Best by J&T Express, industry insiders said.

Editor: Kim Taylor