Chinese Internet giant Alibaba is to pay CNY 28.3 billion ($4.6 billion or roughly Rs. 29,108 crores) for a nearly 20 percent stake in consumer electronics retailer Suning, the two companies said in a statement Monday.
At the same time, the Chinese shopping chain will invest up to CNY 14 billion (roughly Rs. 14,400 crores) for just over one percent of Alibaba, the statement said, bringing the total value of the deal to nearly $7 billion (roughly Rs. 44,715 crores).
It will make Alibaba the second-largest shareholder in Suning, the statement said, adding the two firms would embark on a “strategic collaboration” that “signals the further integration of digital and offline retail”.
Suning is one of China’s biggest consumer electronics retailers, while Alibaba’s Tmall.com site is believed to command more than half the Chinese market for business-to-consumer transactions. ItsTaobao platform holds more than 90 percent of the country’s consumer-to-consumer market.
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Alibaba’s founder and executive chairman Jack Ma said: “Over the past two decades, e-commerce has become an inextricable part of the lives of Chinese consumers, and this new alliance brings forth a new commerce model that fully integrates online and offline.”
Suning chairman Zhang Jindong said the deal would “help transform China’s manufacturing industry and broaden the global horizons of Chinese brands”.
It is the latest in a string of acquisitions by Alibaba as Ma seeks to diversify the huge New York-listed company, which is facing domestic competition from Internet giants Baidu and Tencent and remains relatively unknown outside China.
Two weeks ago Alibaba announced it would invest $1 billion (roughly Rs. 6,388 crores) in its cloud computing arm to expand its international presence.
In June, it launched an Internet bank aimed at serving small businesses which often struggle to obtain credit from large banks.