Alibaba Share Price Prints Fresh Record Highs

By Mariliana Fotopoulou Monday, October 19, 2020

Shares of Alibaba Group moved to fresh record highs in premarket trading today after the Chinese giant said it would buy a majority stake in hypermarket chain Sun Art Retail Group Ltd for $3.6 billion.

The move will provide Alibaba with control of Sun Art’s 481 hypermarkets and three supermarkets in China.

Plans to Expand Operations in the Offline Retail Sector

The ecommerce giant had already acquired a 21% stake in Sun Art and will now raise it to 72% by purchasing a stake in A-RT Retail Holdings, a company that currently holds 51% of Sun Art.

“As the COVID-19 pandemic is accelerating the digitalization of consumer lifestyles and enterprise operations, this commitment to Sun Art serves to strengthen our New Retail vision and serve more consumers with a fully integrated experience,” said Daniel Zhang, Chairman and CEO of Alibaba.

The current CEO of Sun Art, Peter Huang, will also become the company’s chairman, said Alibaba.

Shares of the hypermarket chain jumped over 27% today due to the news.

Alibaba Buys a Stake in a Swiss Duty-Free Firm

Additionally, Alibaba is also looking to buy a stake of up to 9.99% in Dufry, a duty-free company from Switzerland, according to Dufry’s announcement on Monday.

“Alibaba Group and Dufry AG (Dufry) have agreed to enter into a collaboration to jointly explore and invest in opportunities in China to develop the travel retail business and to enhance Dufry’s digital transformation,” Dufry said in a statement.

After taking a large blow from the coronavirus crisis, the duty-free group is now looking to ask its stakeholders to back the acquisition of its Hudson Ltd unit through a new rights issue.

With Alibaba’s contribution, Dufry is now expecting to snatch proceeds of 700 million Swiss francs ($763 million) via the rights issue, compared to 500 million Swiss francs ($549.3 million) before the announcement.

The duty-free group agreed to buy the remaining stake of Hudson back in August and pay $7.70 per share in an all-cash deal worth about $311 million. Once the deal is completed, Hudson will be delisted from the New York Stock Exchange.

On the other hand, the US private equity firm Advent International could grab a stake of almost 20% in Dufry after the rights issue, offering around 415 million Swiss francs ($456 million).

The returns from the rights issue will be used to fund the deal with Hudson and for other business purposes, like the establishment and operations in the joint project with Alibaba, Dufry said.

In that joint venture, Alibaba will hold a majority stake of 51% while Dufry will hold the remaining stake. Dufry said the joint project with Alibaba seeks to expand the duty-free company’s business in online travel retail as well as invest in expansion opportunities in China.

Ant Group Receives a Green Light

In more positive news for Jack Ma’s Alibaba, Ant Group has been permitted by the regulators for its initial public offering (IPO) in Hong Kong.

The highest-valued financial technology giant Ant Group, in which Alibaba holds a 33% stake, is looking to launch a dual IPO in Shanghai and Hong Kong.

The fintech company has been approved by the China Securities Regulatory Commission for the Hong Kong part of its IPO. Ant Group is scheduled to have a hearing with the Hong Kong stock exchange today, a person familiar with the matter said.

Ant Group’s IPO could be one of the largest in history as it seeks to secure $35 billion. Some analysts predicted that Ant could snatch a valuation of more than $200 billion, while the company itself reportedly eyes a valuation of $280 billion.

The group is mostly popular for controlling the hugely popular Alipay mobile payments application, which serves more than 700 million active users monthly in China. A large part of Ant’s revenue also comes from selling fintech products and generating technology service costs as well as providing insurance and wealth management services.

According to recent reports, the White House is seeking to add the Ant Group to the Entity List, a blacklist that would prohibit all US companies from doing business with Ant. However, analysts believe that blacklisting the company would have no major impact on its business as most of Ant’s revenue comes from China.

Summary

Chinese ecommerce giant, Alibaba Group, is looking to buy a controlling stake in the Chinese hypermarket chain Sun Art Ltd for $3.6 billion, just a few days after it acquired a 9.99% stake in the Swiss duty-free company Dufry.

Moreover, Alibaba’s affiliate company, Ant Group, has been authorized by Chinese regulators for the Hong Kong portion of its IPO. Following a series of positive news, Alibaba share price printed fresh record highs today.

About the Author


Headshot for author Mariliana Fotopoulou

Mariliana has an MSC in consumer analytics and business strategy. She has a special interest in fast-moving industries and big data.

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