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Alibaba To Sell Chinese Hypermarket Operator As It Focuses On Core Business


Alibaba Group Holding has agreed to sell its controlling stake in Chinese hypermarket operator Sun Art for up to HK$12.3 billion ($1.6 billion), as the e-commerce company continues to dispose non-core assets even though the deal is expected to generate billions of dollars in losses.

The e-commerce behemoth said Chinese private equity firm DCP Capital, led by former KKR Greater China CEO David Liu, has agreed to acquire its more than 70% stake in Hong Kong-listed Sun Art, which operates the RT-Mart chain and the Costco-like M-Club membership stores across China, according to a stock exchange filing Wednesday. Dual-listed in New York and Hong Kong, Alibaba said the asset disposal will lead to 13.2 billion yuan ($1.8 billion) in losses attributable to its shareholders.

Thomas Chong, a Hong Kong-based analyst at investment bank Jefferies, says Alibaba’s disposal had already been expected by the market following an earlier Sun Art announcement, as well as the company’s December announcement of the sale of the Intime department store chain.

“The disposals align with its strategies to focus on core business and return value to shareholders, ” Chong wrote in a Wednesday research note.

The company first invested in Sun Art in 2017, and put in another $3.6 billion in 2020 as it sought to collaborate with the latter on a so-called new retail strategy, which once included omnichannel deliveries and a more tailored shopping experience using customer analysis software. But as the Chinese economy struggled after years of stringent Covid measures and amid a protracted property crisis, the deal failed to live up to its expectations as consumers spend less and less.

Today, Sun Art is suffering from declining sales, leading it to shut underperforming stores and laying off almost 20,000 employees, according to its 2024 interim report—its latest financial results available. Over the past five years, its shares have lost almost 80% of value, giving the hypermarket operator a market cap of about HK$18 billion.

Alibaba itself faces heightened market competition. In recent years it has been ceding market share to rivals including billionaire Colin Huang’s PDD Holdings, which used deep discounts to attract frugal shoppers amid China’s economic downturn. Now led by a new management team including CEO Eddie Wu, Alibaba is trying to reclaim lost ground by promoting more value-for-money products and using AI for targeted marketing.



Alibaba, the Chinese e-commerce giant, has announced its plans to sell its hypermarket operator as it shifts its focus to its core business. The company is looking to streamline its operations and concentrate on its e-commerce, cloud computing, and digital media businesses.

The hypermarket operator, known as Sun Art Retail Group, operates a chain of hypermarkets and supermarkets in China under the Auchan and RT-Mart banners. Alibaba acquired a controlling stake in Sun Art Retail Group in 2017, but has now decided to divest its interest in the company.

Alibaba’s decision to sell the hypermarket operator comes as the company faces increasing competition in the retail sector from rivals such as JD.com and Pinduoduo. By selling Sun Art Retail Group, Alibaba aims to free up resources and focus on strengthening its core businesses.

This move is part of Alibaba’s broader strategy to streamline its operations and optimize its portfolio of businesses. The company has recently made several strategic investments and divestments to position itself for future growth and profitability.

Alibaba’s decision to sell its hypermarket operator underscores the company’s commitment to focusing on its core strengths and driving innovation in the rapidly evolving Chinese retail market. It will be interesting to see how this move impacts Alibaba’s overall business strategy and future growth prospects.

Tags:

  1. Alibaba
  2. Chinese hypermarket operator
  3. Sell
  4. Focus
  5. Core business
  6. E-commerce
  7. Online marketplace
  8. Retail industry
  9. Business strategy
  10. Growth plan

#Alibaba #Sell #Chinese #Hypermarket #Operator #Focuses #Core #Business

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