Alibaba Sells Majority Stake in Sun Art Retail Group to Refocus on Core Business

Alibaba Sells Majority Stake in Sun Art Retail Group to Refocus on Core Business

Agreement Details

Alibaba Group Holding Ltd. announced on Wednesday that it has agreed to sell its 78.7% majority stake in Sun Art Retail Group to DCP Capital. The deal is valued at HK$12.298 billion ($1.58 billion), according to a filing with the Hong Kong Stock Exchange.

Background on Sun Art Investment

Alibaba acquired a controlling stake in Sun Art Retail Group for $3.6 billion in 2020. The investment was aimed at leveraging Alibaba’s digital expertise to enhance Sun Art’s operations, which include hundreds of hypermarkets across China.

Stock Performance and Timing

The decision to sell follows an 85% increase in Sun Art’s share price over the past year, significantly outpacing the Hang Seng Index, which rose around 20% during the same period.

Portfolio Restructuring Strategy

In addition to the Sun Art divestiture, Alibaba is selling its Chinese department store unit, Intime, even though the transaction may result in a financial loss. These sales are part of Alibaba’s strategic shift to refocus on its core e-commerce business.

Conclusion

The stake sales reflect Alibaba’s efforts to streamline its operations and adapt to shifting market dynamics, prioritizing its primary e-commerce activities.