Alibaba to buy Sun Art for $2.88 billion

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Chinese e-commerce giant Alibaba (BABA) has expanded its presence in traditional bricks-and-mortar retailing with the acquisition of  a 36.16% stake in China hypermarket operator Sun Art Retail Group for HKD$22.4 billion ($2.88 billion), which operates 490 outlets across China.

The deal makes Alibaba the second largest shareholder in the business, which has a market cap of over US$10 billion. Ruentex, the shareholder that sold to Alibaba, will retain a 4.67 share while French retailer Auchan Retail owns a dominant 36.18 percent.

“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.

The deal will draw inevitable comparisons to Amazon’s acquisition of Whole Foods for $13.7 billion this year, but that would be misplaced. The Whole Foods deal marked a major point for Amazon’s entry into physical retail, however Alibaba’s move into offline began years ago and this is only the largest part of that strategy.

Alibaba bought a 35 percent slice of department store operator InTime in 2014 and then gobbled up 20 percent of retail giant Suning for $4.6 billion in 2015, but it foot the pedal on the gas in 2017. In January, it snapped up the remainder of InTime and took the company private, while in May it invested in supermarket brand Lianhua.

“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,” Daniel Zhang said in a statement.

“By fully integrating online and physical channels together with our partners, we look forward to delivering an original and delightful shopping experience to Chinese consumers,” he added.

This retail convergence in China isn’t only being driven by Alibaba. Rival JD.com invested in Yonghui in 2015.

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Grace Guo

Grace has been working for Nokia Beijing office for 5 years, so she has profound knowledge of phone hardware. Her job at Driversdown is smartphone hardware test and writing review articles of new released phones. In order to get more practical data, she might have a new smartphone very week or month. Contact Grace via grace@driversdown.com