Alibaba Group announced on Monday that it will invest US$2.87 billion (HK$22.4 billion) to acquire 36 percent stake in Chinese hypermart operator Sun Art Retail Group.
Sun Art operates about 450 hypermarkets under the Auchan and RT-Mart banners across 224 cities in mainland China.
“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, Alibaba’s chief executive officer, said in a statement.
As part of an alliance with French retailer Auchan Retail and Taiwan’s Ruentex Group, Alibaba will buy Sun Art Retail stake from Ruentex. Auchan Retail, meanwhile, will boost its stake in Sun Art to a level roughly similar to that of Alibaba.
When the transactions are completed, Auchan will own 36.18 percent of Sun Art Retail, while Alibaba will hold 36.16 percent and Ruentex 4.67 percent. Alibaba will replace Ruentex as the second-largest shareholder of the Chinese hypermarket operator.
Sun Art is a grocery store leader in China, with its brands taking about 15 percent share in the hypermarket business in the country, followed by Walmart stores with 10 percent, Bloomberg reports, citing Euromonitor data.
But the grocer has been slow to go online, with its platform Feiniu lagging bigger players like China Resources and Wal-Mart Stores.
“Alibaba and Sun Art are forming a strong alliance: China’s dominant e-commerce giant and its best hypermarket operator,” Veronica Wang, an associate partner with OC&C Strategy Consultants, told Bloomberg. “They can leverage the alliance and bring more benefits than Walmart and JD.”
Walmart, the world’s largest retailer, is focused on turning around a sluggish Chinese operation through a partnership with JD.com, marrying online commerce with data and combining their network of warehouses and cold storage for same-day delivery to customers.
Walmart increased its stake in JD.com to over 10 percent last year, according to a regulatory filing.
Reuters noted that Alibaba has invested upwards of US$9.3 billion in brick-and-mortar stores in recent years.
In 2014, Alibaba bought 35 percent stake in Chinese department store operator InTime, and in the following year took 20 percent in electronics and electrical appliance retailer Suning.
In January this year, Alibaba snapped up the remaining stake in InTime and took the company private. In May, the e-commerce behemoth invested in the supermarket brand Lianhua.
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