Alibaba is at the forefront of a bid that would take Intime Retail Group private, with a price tag of as much as $2.6 billion, part of a larger strategy to broaden its brick-and-mortar reach.
Several news outlets reported that China’s largest internet retailer is expanding its efforts to counteract slowing sales growth seen online, while, as Bloomberg said, the privatization of Intime might help Alibaba “explore ways to modernize a $4.5 trillion industry that hasn’t adapted well to the growing popularity of online shopping.” By reducing middlemen, said the site, the retail juggernaut would be able to strip out costs, boost efficiencies and, by extension, pricing and margins.
In an interview, Bloomberg Intelligence Analyst Catherine Lim said: “This deal shows that there is still value to brick-and-mortar stores, enough to interest eCommerce players. What it’s shown is that department store chains are still relevant and of value. We could be seeing renewal of a sunset industry.”
The $2.6 billion price tag would offer up a 42 percent premium for Intime, as paid by Alibaba and Intime Founder Shen Guojun, at HK$10 a share — and Alibaba already owns three-quarters of the company’s stock. This privatization also marks Alibaba’s first deal of the new year, folding into Alibaba the 29 department stores and 17 shopping malls owned by Intime.
Bloomberg reported that the partnerships with brick-and-mortar retailers would “pioneer” a new model of hybrid online and offline sales, as technology can be harnessed for better inventory control and pickups in-store.