Alibaba takes a $2.9 billion stake in China’s largest grocer

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  • Alibaba paid $2.87 billion for a serious stake in China’s prime grocer, Sun Art Retail Group.
  • The deal makes Alibaba the second largest shareholder.
  • Sun Art holds about eight.2% of China’s grocery market.

 

(Reuters) – Internet large Alibaba Group Holding Ltd mentioned on Monday it might make investments HK$22.four billion ($2.87 billion) for a serious stake in China’s prime hypermart operator, Sun Art Retail Group Ltd, a part of a wider push into offline retail.

As a part of an alliance with Auchan Retail S.A. and Ruentex Group, Alibaba would purchase the stake from Ruentex whereas Auchan Retail would enhance its stake, the three firms mentioned in a joint badertion.

The alliance would goal alternatives in China’s $500 billion meals retail sector, as Alibaba races to construct big-data capabilities within the offline retail market the place roughly 85 p.c of gross sales are made.

“Physical stores serve an indispensable role during the consumer journey, and should be enhanced through data-driven technology and personalised services in the digital economy,” AlibabaChief Executive Officer Daniel Zhang mentioned within the badertion.

Shares of Hong Kong-listed Sun Art, which had been suspended on Nov. 13, resumed on Monday and had been down 5.three p.c in morning commerce, whereas the benchmark index was flat.

The deal would give French retailer Groupe Auchan SA, China’s Alibaba Group and Taiwanese conglomerate Ruentex 36.18 p.c, 36.16 p.c and four.67 p.c stakes respectively in Sun Art. Alibaba would exchange Ruentex because the second-largest shareholder.

Alibaba has invested upwards of $9.three billion in brick-and-mortar shops since 2015. It has launched many un-staffed idea outlets up to now 12 months, together with grocery and occasional shops.

The $474 billion agency is taking extra dangers to safe offline, rural and abroad consumers as China’s city e-commerce market exhibits indicators of saturating, together with buying in depth infrastructure which it had beforehand averted.

“They’re getting into a territory that’s not their core strength … for example securing a property, the licences to sell certain products, paying tax, more labor and so on,” mentioned Weiwen Han, managing companion for Greater China at Bain & Company.

“On one hand they really need to do it, but on the other hand they are facing a lot of challenges that they have never experienced before.”

Sun Art is China’s grocery retailer chief with about eight.2 p.c of the market, in keeping with knowledge from Kantar Worldpanel.

It operates about 450 hypermarkets throughout China underneath the RT-Mart and Auchan banners. It additionally operates unmanned shops underneath the Auchan Minute model.

It has been sluggish to go surfing, with its platform Feiniu lagging greater gamers like China Resources and Wal-Mart Stores Inc.

In a separate badertion, Sun Art mentioned Alibaba‘s Taobao China Holding Ltd would make a normal supply for the corporate at HK$6.50 apiece. ($1 = 7.8123 Hong Kong ) (Reporting by Cate Cadell and Donny Kwok; Editing by Stephen Coates)

Get the most recent Alibaba inventory value right here.

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