After failing in its IPO attempt four times, Ximalaya is selling itself to Tencent Music for 20 billion yuan.

Author | Li Xiaoxia
Editor | Qiao Qian

The leading online audio platform, Himalaya, has finally ended up being sold.

On June 10, Tencent Music Entertainment (TME) announced that it had entered into a merger agreement and plan with Himalaya Holdings (hereinafter referred to as Himalaya) and several other contracting parties regarding the proposed acquisition of Himalaya.

TME will pay $1.26 billion in cash, plus Class A common stocks not exceeding 5.1986% of the total number of shares (the total number of shares is calculated based on the issued and outstanding common stocks in the five trading days before the transaction closing), and Class A common stock incentives for Himalaya's founding shareholders, with the total number not exceeding 0.37% of the total number of shares. In total, the acquisition cost is nearly $2.9 billion, about 20 billion yuan.

The acquisition will be officially completed after all the pre - conditions are met, including obtaining the approval of the anti - monopoly review from the State Administration for Market Regulation. Subsequently, both parties will jointly promote the relevant procedures.

According to 36Kr, on June 9, both parties completed the board signature. The official announcement was originally scheduled for 18:30 on the 10th, but the time was later advanced.

To ensure a smooth transition, Himalaya's founder and core management team will remain in their positions after the transaction is signed. TME will explore the optimal path for business integration with Himalaya.

As early as April, there were rumors that TME intended to acquire Himalaya for $2.4 billion, and the actual acquisition price is quite close to the rumored figure. Some media reported that as early as 2022, TME had contacted Himalaya, but the negotiation failed.

TME's net profit in Q1 this year was 4.3 billion yuan. If calculated based on this, buying Himalaya would cost nearly five quarters of profits, which doesn't seem cheap.

Considering that Himalaya's valuation was $5 billion when it first sought to go public in 2021, this acquisition is equivalent to a 50% discount. According to 36Kr, Yu Jianjun, the founder of Himalaya, once expected the valuation of Himalaya to reach as high as $10 billion.

After Himalaya was launched in 2012, the long - audio market experienced a golden period of rapid growth. During this period, Himalaya quickly accumulated a large number of users with its rich content ecosystem, including audiobooks and knowledge payment services. In 2019, its user scale exceeded 600 million, with 160 million monthly active users, making it a leader in the industry.

From its establishment to the submission of its IPO application in the United States, Himalaya conducted 12 rounds of financing, with a total financing amount of nearly 10 billion yuan. Its shareholders include a luxurious lineup such as Tencent, Xiaomi, Baidu, General Atlantic, and Goldman Sachs.

However, behind the glory, there was an endless stream of losses. According to the prospectus, from 2018 to 2022, Himalaya's losses were 774 million yuan, 773 million yuan, 605 million yuan, 718 million yuan, and 296 million yuan respectively, with a cumulative loss of 3.166 billion yuan.

It wasn't until 2023 that Himalaya turned a profit, with a net profit of 224 million yuan. However, this profit was mainly achieved through cost - cutting measures such as layoffs, salary cuts, and reduced sales and marketing expenses.

This profit - making plan started in August 2022. At that time, Yu Jianjun first clarified the specific profit - making plan to all employees of the company, including achieving annual profit in 2023.

According to a report by LatePost, a Himalaya insider said that the collapse of Missfresh had a great impact on the management. They believed that it was not an accidental event, and companies that couldn't truly achieve profitability were very dangerous.

When Himalaya achieved profitability, its revenue had stagnated. From 2021 to 2023, Himalaya's revenues were 5.856 billion, 6.061 billion, and 6.163 billion yuan respectively, with growth rates of 43.7%, 3.5%, and 1.7%.

Himalaya's revenue consists of subscriptions, advertising, live - streaming, etc. Among them, the growth rate of subscription revenue dropped sharply from 49% in 2021 to 3.49% in 2023, and advertising revenue also decreased from 1.488 billion yuan in 2021 to 1.423 billion yuan.

With such mediocre performance, Himalaya, which had sought an IPO four times from April 2021 to 2024, failed to achieve its goal.

Why does TME still want to acquire Himalaya in this state? It has to do with TME's regrets.

In 2020, when Himalaya was at its peak, TME launched its long - audio strategy and introduced the "Kugou Listening" APP. Peng Jiaxin, the then CEO, declared that "long - audio will be a strategic area where TME will continue to make efforts in the future." A "full - scale war" against Himalaya began.

TME's initial strategy was simple and straightforward: it used a large amount of money to poach Himalaya's top anchors. Under the attack of "financial power", Cheng Yi and Rui Xi, two top emotional anchors on Himalaya, were lured away with sky - high prices.

This battle was very costly. In Q2 of 2020, TME's sales and marketing expenses reached 579 million yuan, and a significant portion of it was spent on long - audio promotion. In 2021, eight days after Liang Zhu, a veteran of Tencent, took over as CEO, he integrated the 2.7 - billion - yuan - acquired Lanren Listening with Kugou Listening into "Lanren Kugou Listening".

Even after this confrontation, TME still failed to establish its long - audio territory. On the other hand, Tomato Listening, under ByteDance, had risen rapidly. By audio - converting the content of Tomato Novels and adopting a free strategy, it seized the market.

For TME, this acquisition further fills its short - board. Himalaya has a complete content ecosystem including podcasts, audiobooks, and knowledge payment services. TME can directly acquire Himalaya's 300 million monthly active users. Especially when the cost of independent customer acquisition for audio platforms is continuously rising under the squeeze of short - videos, this acquisition is beneficial for TME to consolidate its defense line in the audio field against ByteDance.

Himalaya's current situation may be due to human factors, such as the management style of the co - CEOs, which led to an imbalance in the strategic direction. It also faces challenges in its business model and the impact of short - videos.

Anyway, after more than a decade of twists and turns, being sold has become the best outcome for Himalaya at present.