A PYMNTS Company

Alibaba Offers $3.75 Billion for Remaining Stake in Cainiao

 |  March 26, 2024

Alibaba announced on Tuesday its decision to forego the initial public offering (IPO) of its logistics arm, Cainiao, in Hong Kong. Instead, the e-commerce giant disclosed its intention to acquire the remaining 36% stake in Cainiao, which it does not already own, for up to $3.75 billion.

Alibaba’s move marks a departure from its earlier plans to list Cainiao independently on the Hong Kong stock exchange. The company, which presently holds approximately 64% of Cainiao’s shares, emphasized the strategic importance of the logistics business in its operations and outlined its commitment to bolstering a global logistics network.

Alibaba Group Chairman, Joe Tsai, clarified that regulatory concerns were not a driving factor behind the decision to withdraw Cainiao’s IPO. Tsai reiterated the company’s stance on market conditions, stating that all planned IPOs, including Cainiao’s, were contingent on favorable market dynamics. He underscored the challenging environment for capital market transactions, particularly in the Hong Kong market, citing subdued investor sentiment and decreased activity in the IPO space.

Read more: Alibaba Nears First Big Deal Since Antitrust Fine

Following the announcement, U.S.-listed shares in Alibaba experienced a modest uptick of 0.7% in pre-market trading, signaling investors’ approval of the decision. Tsai emphasized the company’s commitment to maximizing shareholder value and stated that pursuing capital market deals in the current climate would not be conducive to unlocking shareholder value effectively.

The decision comes amid a broader slowdown in the Hong Kong IPO market, which witnessed a considerable decline in activity in 2023. With only 73 company listings raising HK$46.3 billion ($5.92 billion), down 56% from the previous year, the market experienced a notable contraction, reflecting the challenging conditions for IPOs.

Source: Reuters