Published: Mon, November 20, 2017
Science | By Hubert Green

Alibaba Acquires $2.9 Billion Stake In China's Offline Retail Giant, Sun Art

Alibaba Acquires $2.9 Billion Stake In China's Offline Retail Giant, Sun Art

Taobao will form an alliance with Auchan Retail S.A. and Reuntex Group. Ruentex's share of Sun Art will fall to about 4.7% after the transaction. Auchan Retail is also increasing its stake in Sun Art.

The deal would hand Groupe Auchan, a French retailer, Alibaba Group, a Chinese company, and Ruentex, a Taiwanese firm, a 36.18 percent, 36.16 percent, and 4.67 percent stakes, respectively, in Sun Art. Alibaba would change Ruentex as the second-largest shareholder in the business, which has a market cap of over US$10 billion.

"Alibaba is excited to join with our new partners to redefine traditional retail through digital transformation", said Daniel Zhang, Chief Executive Officer of Alibaba Group.

"Physical stores serve an indispensable role during the consumer journey and should be enhanced through data-driven technology and personalized services in the digital economy".

He added that by integrating fully online and physical, together with partners, we are looking forward to delivering a delightful and original shopping experience across all of China.

Alibaba Group Holding Ltd (NYSE:BABA) has made yet another key investment in the Chinese retail space, this time acquiring a large piece of a major supermarket chain.

Hangzhou-based Alibaba Group said in a filing that its subsidiary Taobao China Holding will buy a direct 26-per cent stake in the company from Kofu and Concord Greater China for HK$16.1billion ($2.1bn), at around HK$6.50 a share.

It operates about 450 hypermarkets across China under the RT-Mart and Auchan banners.

Sun Art is seen as a bit of a reclamation project following years of declining sales.

Auchan Retail's chief executive officer Wilhelm Hubner said the alliance stemmed from the companies shared visions for the future of commerce in China.

Alibaba is exerting more efforts to secure offline, rural, and overseas customers as China's urban electronic commerce market shows indications of steeping, including buying extensive infrastructure which it had formerly avoided.

Sun Art is now an offline, exclusively bricks and mortar retailer.

Alibaba is sustaining its enhancement into offline retail succeeding the Chinese e-commerce mammoth purchased more than one-third of one of Chinese most productive mechanics of hypermarket stores.

The deal for Whole Foods marked a big point for entry by Amazon into the physical brick and mortar retail, but the move by Alibaba into offline started several years ago and this in the biggest part of the strategy.

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