By Casey Hall and Rishav Chatterjee
SHANGHAI (Reuters) – Alibaba Group said on Tuesday it is offering to buy the 36% of Cainiao it does not already own for up to $3.75 billion, boosting plans for an initial public offering (IPO). logistics business in Hong Kong.
In the Chinese e-commerce giant's latest reversal of its restructuring plan, Alibaba, which holds a roughly 64% stake in Cainiao, said it had offered to acquire the remaining shares.
“Given the strategic importance of Cainiao to Alibaba and the significant long-term opportunity we see in building a global logistics network, we believe this is the right time to invest again,” said Joe Tsai, chairman of Alibaba Group.
Alibaba's U.S.-listed shares rose 0.7% in premarket trading following the announcement.
Tsai said in a recent earnings call that all of Alibaba's planned IPOs, including Cainiao's, “depended on market conditions.”
“Market conditions are simply not in a state right now where we believe we can truly reflect the true intrinsic value of these companies,” he said at the time.
Three sources familiar with the matter said the company had faced a mismatch between potential investors' valuation expectations. Alibaba did not immediately respond to a request for comment on any valuation mismatch.
Hong Kong's IPO market saw a slowdown in activity in 2023, with 73 listings raising HK$46.3 billion (US$5.92 billion), down 56% from 2022.
In a statement on Tuesday, Alibaba said it was offering Cainiao's minority shareholders the opportunity to sell all outstanding shares for $0.62 per share.
Alibaba has had a tumultuous year since the company announced the biggest restructuring in its 25-year history by splitting into six units. The company brought in a new CEO, announced the listing of its cloud division, but then gave up and refocused on its core businesses.
These core businesses – e-commerce and cloud – will now be led by new Group CEO Eddie Wu. Although Alibaba's domestic e-commerce platforms Tmall and Taobao are still China's largest, they have lost market share in recent years to rivals such as PDD Holdings' Pinduoduo.
The story goes on
“The management restructuring resulted in more flexible and efficient decision-making and we have seen significant positive impacts on our business. We are confident that the impact of this restructuring will be reflected in Alibaba's operating and financial metrics in the future,” Tsai said.
Cainiao first filed IPO documents with the Hong Kong Stock Exchange in September. Tuesday marked the final day of a six-month window before which the company had to update its listing status. No schedule was ever publicly announced.
Alibaba also said it would hold a conference call at 9:30 p.m. Hong Kong time to discuss Cainiao's announcement.
($1 = 7.8231 Hong Kong dollars)
(Reporting by Rishav Chatterjee in Bengaluru and Casey Hall in Shanghai; Editing by Tasim Zahid, Alexander Smith, Ros Russell and Louise Heavens)
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