Alibaba to invest $3.6B in China's top hypermarket operator Sun Art

Marco Green
October 21, 2020

Alibaba Group Holding Ltd. will invest about US$3.6 billion to double its stake in Sun Art Retail Group Ltd., taking control of one of China's largest hypermarts to try and fend off rivals like JD.com Inc in e-commerce's hottest growth arena. Alibaba is also considering purchase of the remaining Sun Art shares for HK$17 billion, it disclosed in a filing to stock exchanges.

Today's deal comes three years after Alibaba paid $2.9 billion to acquire just over 36 percent of Sun Art as part of what was termed at the time as a strategic alliance with Auchan Retail and Taiwan's Ruentex Group.

The online groceries segment has leapt to the forefront during Covid-19 when shoppers shunned restaurants and physical stores, though the industry - which requires more complex logistical structures such as so-called cold chain storage - has proven hard to crack in years past.

Alibaba will pay HK$28bn (US$3.6bn, £2.bn) to raise its stake in the Hong Kong-listed Sun Art from 21% to 72% according to a company statement. A-RT owns 51 percent of Sun Art.

"New Retail" aims to blur the lines between online and offline commerce through steps like turning physical stores in pickup points for online orders, integrating supply chains and enabling shoppers to use the same digital payment methods on its e-commerce platforms and in brick-and-mortar stores. All Sun Art physical stores in China have been integrated into Alibaba's Taoxianda and Tmall Supermarket platforms, providing one-hour and half-day on-demand delivery to consumers. Peter Huang, Sun Art's CEO, will add the title of chairman for the business.

Besides Sun Art, Alibaba, the owner of Taobao, the world's biggest online retailer, has earlier made a clutch of other investments in this industry previously.

"As the Covid-19 pandemic is accelerating the digitalisation of consumer lifestyles and enterprise operations, this commitment to Sun Art serves to strengthen our New Retail vision and serve more consumers with a fully integrated experience", Alibaba chairman and chief executive officer Daniel Zhang said in a statement.

The supermarket chain has since been "leveraging resources and technology from the Alibaba ecosystem".

Other reports by Click Lancashire

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