Alibaba investing in Sanjiang Shopping Club
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Chinese eCommerce giant Alibaba Group Holding plans to invest 2.1 billion yuan (US$305 million) in supermarket chain Sanjiang Shopping Club.
Sanjiang’s share were suspended by the Shanghai stock exchange on November 8, with trading resuming today.
Under the terms of the deal, according to stock-exchange filings, Alibaba will subscribe to a private placement in Sanjiang, giving it about a 25 per cent stake.
Sanjiang also plans to issue up to 188 million yuan worth of exchangeable bonds to Alibaba, which will also acquire another 9.3 per cent stake for 438.6 million yuan via a share transfer, says Sanjiang. This will take Alibaba’s stake to 32 per cent, above the 30 per cent threshold where Chinese law says a company must make a full takeover bid in China. Alibaba will need approval from Sanjiang’s shareholders to waive this requirement.
Sanjiang said it aims to use Alibaba’s eCommerce platform as China’s economic growth slows.
Questions & Answers
Q.What is the total investment Alibaba Group Holding is making in Sanjiang Shopping Club?
What is the total investment Alibaba Group Holding is making in Sanjiang Shopping Club?
Alibaba plans to invest 2.1 billion yuan (US$305 million) through a private placement and acquire a further 9.3 per cent stake for 438.6 million yuan via a share transfer. Sanjiang also plans to issue up to 188 million yuan worth of exchangeable bonds to Alibaba.
Q.What will Alibaba's final stake in Sanjiang Shopping Club be after these transactions?
What will Alibaba's final stake in Sanjiang Shopping Club be after these transactions?
Initially, the private placement will give Alibaba about a 25 per cent stake. With the additional 9.3 per cent acquired through a share transfer, Alibaba's total stake will reach 32 per cent.
Q.How does Sanjiang Shopping Club intend to benefit from Alibaba's investment?
How does Sanjiang Shopping Club intend to benefit from Alibaba's investment?
Sanjiang aims to use Alibaba's eCommerce platform. This strategy is being pursued as China's economic growth slows, suggesting a move towards online retail for future growth.