Alibaba Group Holding Ltd. BABA is reportedly close to merging its South Korean operations with E-Mart Inc. in a deal valued at approximately $4 billion. This strategic move aims to bolster their position in South Korea’s competitive online retail market.
What Happened: The potential joint venture would combine the e-commerce assets of both companies, creating a stronger entity to challenge local competitors like Naver Corp. and Coupang Inc. CPNG. Discussions are ongoing, and while an announcement could come as soon as this week, finalizing the agreement may take longer, Bloomberg reported on Thursday.
The merger comes as Alibaba seeks to expand its international presence amid slowing growth in its core Chinese market. Meanwhile, E-Mart has been actively growing its e-commerce segment, notably acquiring a controlling interest in eBay Inc.’s EBAY South Korean marketplace in 2021 for roughly $3 billion.
Neither Alibaba nor E-Mart has commented on the matter yet to Benzinga.
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This development occurs against a backdrop of declining consumer confidence in South Korea, impacted by political instability following President Yoon Suk Yeol’s declaration of martial law and subsequent impeachment.
Why It Matters: The potential merger between Alibaba and E-Mart is part of Alibaba’s broader strategy to refocus on its core e-commerce operations. Earlier this year, Alibaba announced plans to divest several consumer sector assets, including its grocery business Freshippo and retailer RT-Mart. This move aligns with the company’s strategic pivot under Chairman Joe Tsai and CEO Eddie Wu, aiming to shed non-essential and unprofitable units.
Moreover, Alibaba’s recent investment of $71.4 million in South Korean apparel brand Ably Corp has turned it into the country’s first unicorn of 2024, highlighting Alibaba’s growing interest in the South Korean market. This investment valued Ably at over $1 billion, marking a significant increase from its previous valuation.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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