Tencent Music Entertainment Group (TME) saw its stock surge 5.51% in pre-market trading on Tuesday, following the announcement of its proposed acquisition of Ximalaya Inc., a leading online audio platform in China. This strategic move is set to significantly expand TME's presence in the digital audio market.

According to the Agreement and Plan of Merger dated June 10, 2025, TME will acquire Ximalaya for a combination of cash and stock. The deal involves a cash payment of $1.26 billion and the issuance of Class A ordinary shares by TME. Upon completion of the transaction, Ximalaya will become a wholly-owned subsidiary of Tencent Music, subject to regulatory approvals and other closing conditions.

The market's positive reaction to this announcement reflects investor optimism about the potential synergies and growth opportunities this acquisition could bring. By integrating Ximalaya's popular audio content and user base, Tencent Music is poised to strengthen its position in China's competitive online entertainment landscape. However, investors should note that as part of the merger, Ximalaya will undertake a restructuring of some of its existing businesses, which may impact the final form of the combined entity.