Chinese e-commerce giant Alibaba Group Holding Ltd. BABA announced plans to sell its 78.7% stake in hypermarket chain Sun Art Retail Group to private equity firm DCP Capital for HK$12.298 billion ($1.58 billion), marking another step in its strategic refocus on core operations.
What Happened: The deal, announced on Wednesday, represents a significant markdown from Alibaba’s $3.6 billion investment in 2020 when it acquired the controlling stake in Sun Art to expand its brick-and-mortar retail presence.
According to Alibaba’s filing with the Hong Kong Stock Exchange, the company expects to record a loss of approximately RMB 13.177 billion ($1.81 billion) from the transaction.
The sale comes amid Sun Art’s strong market performance, with its shares surging 85% in Hong Kong over the past year, outperforming the Hang Seng Index’s 20% gain.
The transaction price of HK$1.75 per share includes a base payment and potential interest based on Sun Art’s future performance through 2028.
Why It Matters: This divestment aligns with Alibaba’s broader restructuring efforts, which include the recent sale of its Chinese department store unit Intime. The company plans to use the proceeds for business development, shareholder returns, and general corporate purposes.
DCP Capital, which manages approximately $2.6 billion through its DCP Capital Partners II fund, will be required to make a mandatory offer for remaining Sun Art shares following the deal’s completion, which is subject to regulatory approvals.
Alibaba’s stock closed at $84.79 on Tuesday, up 0.78%, with analysts maintaining a consensus price target of $119.82, suggesting a potential upside despite the company’s strategic shifts.
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