Alibaba to pay US$4.6b for 20% stake in Suning
Print Edition
ALIBABA yesterday announced its plan to buy a 19.9 percent stake in home appliance and electronics retailer Suning Commerce Co for 28.3 billion yuan (US$4.6 billion).
The deal, which will be completed by private placement, will make Alibaba the second-largest shareholder in Suning, Jack Ma, chairman of the e-commerce giant told a press conference in Nanjing, east China’s Jiangsu Province.
“We will establish a new platform to allow manufacturers and merchants to grow better,” he said.
As part of the deal, Nanjing-based and Shenzhen-listed Suning will subscribe to 14 billion yuan worth of new shares in Alibaba Group, to give it about a 1.1 percent share of its enlarged capital.
“Internet companies should embrace traditional industries and only in this way can we create a win-win situation for consumers as well as merchants and service providers,” Suning Chairman Zhang Jindong told the press conference.
The collaboration is a prime example of how to combine online and offline businesses, he said.
The retailer will use Alibaba’s huge online presence as a key distribution channel for its products, while the latter will gain access to more than 1,600 bricks-and-mortar stores to complement its offline services and delivery network.
Suning will open a flagship store on Alibaba’s Tmall.com platform and will combine its logistics network with Alibaba’s infrastructure, Suning Vice President Sun Weimin said.
When asked, neither company offered an explanation as to how they will resolve the issue of their separate online payment systems.
According to research firm Analysys International, Tmall had a 52.5 percent share of the online retail sector in the first quarter, with Suning in third spot with 4 percent.
Alibaba Group Chief Executive Daniel Zhang said the partnership will also extend into international markets and rural areas of China.
“Our two companies share a vision of how the Internet can help traditional retailers and companies to transform their business,” he said.
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