Customers shop in a RT-Mart hypermarket operated by Sun Art Retail Group.
Julia March/Bloomberg
onelibaba Group Holding has agreed to sell its controlling stake in Chinese hypermarket operator Sun Art Retail for up to HK$12.3 billion ($1.6 billion), raising concerns about the e-commerce company even as the deal is expected to generate billions of dollars in revenue. Sales of non-core assets continue.
The e-commerce giant said Chinese private equity firm DCP Capital, led by former KKR Greater China chief executive David Liu, has agreed to acquire more than 70% of Hong Kong-listed Sun Art Retail, which operates the RT-Mart chain and RT-Mart chain stores, according to a report to Securities on Wednesday. According to documents submitted by the exchange, members stores similar to Costco's M-Club are located across China. Alibaba, which is dual-listed in New York and Hong Kong, said the asset disposal would cost shareholders 13.2 billion yuan ($1.8 billion).
Thomas Chong, an analyst at investment bank Jefferies in Hong Kong, said the market had anticipated Alibaba's sale, following earlier announcements by Sun Art Retail and the company's announcement in December that it was selling its Intime department store chain.
“These disposals are in line with its strategy to focus on its core business and return value to shareholders,” Chong wrote in a research note on Wednesday.
The company first invested in Sun Art Retail in 2017 and invested another $3.6 billion in 2020, seeking to cooperate with the latter on its so-called new retail strategy, which has included omni-channel delivery and the use of customer analytics software to provide more customization. personalized shopping experience. But the deal fell short of expectations as consumers spend less as China's economy reels from years of strict COVID-19 measures and a protracted housing crisis.
According to its latest mid-term report for 2024, Sun Art Retail is currently suffering from declining sales, leading the company to close underperforming stores and lay off nearly 20,000 employees. Its shares have fallen nearly 80% over the past five years, giving the hypermarket operator a market capitalization of about HK$18 billion.
Alibaba itself is also facing more intense market competition. It has been losing market share in recent years to rivals including billionaire Colin Huang's PDD Holdings, which has used deep discounts to attract thrifty shoppers during China's economic downturn. who. Now, under a new management team that includes Chief Executive John Woo, Alibaba is trying to regain lost ground by promoting more value-for-money products and using artificial intelligence for targeted marketing.
