Alibaba to Spend $4.6 Billion on Suning
If the deal will take place, and there are no evident reasons to think differently, the Alibaba Group (BABA) will invest $4.6 billion in Suning Commerce Group and take a 19.99% stake in the company. On the other hand, Suning will invest $2.3 Billion in Alibaba’s share and take a 1.09% stake of the company. According to a statement distributed on Business Wire Monday, the companies will partner in logistics and online sales to target deliveries as fast as two hours, in order to boost the e-commerce profitability, which in the last months has known a stagnation in sales due to the recent industrial and stock market’s decline.
With this big deal, Alibaba is aiming to fix two major recent issues: the first one and more important for the short period is about enlarging its retailing and storage resources, to provide customers high-speed deliveries on a national and always broader basis; this will be done by leaning on Suning’s vaste retail presence. The second issue is linked with its rival JD.com Inc., which has recently signed an agreement with Amazon and could affect Alibaba’s e-commerce business in the future.
Being present both online and on the ground will result to help Alibaba in focusing also on the electronics market, as the partnership will include sharing both customers databases to enable in-store mobile payments and cooperating in areas including cloud computing, online payments and mobile apps development. So far Alibaba has been very active in the acquisition domain, as in the last year Alibaba has finalised 25 deals at a value of $5.9 billion, but since last January the company has announced 22 deals at a total value of $9.1 billion.