By Ivan Chung, Justin Leung, Thomas Fujimoto (HKUST), Alexander Bergmüller, Huang Haozhe, Friedrich von Storch (IE BUSINESS SCHOOL)
Overview of the deal
Acquirer: Alibaba Group Holding Ltd
Target: Sun Art Retail Group Ltd
Implied Equity Value: $3.6 billion
Announced Date: October 18th, 2020
Acquirer Advisor: CICC
On October 18th, Alibaba Group Holding Ltd announced that it is investing approximately $3.6 billion to acquire a controlling stake in Sun Art Retail Group Ltd, the China-based hypermarket operator. Alibaba, which already held a 21% stake in Sun Art pre-transaction, will attain an additional 51% equity interest through the purchase of a 70.94% share in A-RT Retail Holdings from France-based Auchan Retail International. Post-transaction, Alibaba’s stake will amount to 72%.
The deal is in line with Alibaba’s “New Retail” strategy of creating a seamlessly integrated shopping experience that blurs the boundaries between online and offline commerce. As part of the strategy, Alibaba will allow offline retail customers to pay with the same digital payment methods that are also available online and enable shoppers to view relevant product information by scanning QR codes. Also, customers can use the physical retail stores as pickup points for online orders.
After the transaction, all of Sun Art’s 484 Chinese physical retail stores will be integrated into Alibaba’s Tmall and Taoxianda supermarket platforms, as well as other key businesses across the Alibaba ecosystem, including the food delivery app Ele.me and the logistics business Cainiao. As a result, Alibaba can ensure fast deliveries and an extensive product offering while collecting actionable customer insights that can be used to advance its business operations and supply chain.
“As the COVID-19 pandemic is accelerating the digitalization of consumer lifestyles and enterprise operations, this commitment to Sun Art serves to strengthen our New Retail vision and serve more consumers with a fully integrated experience” - Daniel Zhang, Chairman and Chief Executive Officer of Alibaba Group
Company Details: Acquirer – Alibaba Group Holding Ltd
Alibaba Group Holding Limited, through its subsidiaries, provides online and mobile commerce businesses in the People's Republic of China and internationally. It operates through four segments: Core Commerce, Cloud Computing, Digital Media and Entertainment, and Innovation Initiatives and Others. The company operates Taobao Marketplace, a mobile commerce destination; Tmall, a third-party online and mobile commerce platform for brands and retailers; Alibaba Health Internet platforms for pharmaceutical and healthcare products; Alimama, a monetization platform; 1688.com and Alibaba.com, which are online wholesale marketplaces; AliExpress, a retail marketplace; Lazada, an e-commerce platform; and Tmall Global, an import e-commerce platform. It also operates Lingshoutong (a digital sourcing platform), Cainiao Network (a logistic services platform), Ele.me (a delivery and local services platform), Koubei (a restaurant and local services guide platform), and Fliggy (an online travel platform). In addition, the company offers pay-for-performance and display marketing services; and Taobao Ad Network and Exchange, a real-time bidding online marketing exchange. Further, it provides elastic computing, database, storage, virtualization network, large-scale computing, security, management and application, big data analytics, and Internet of Things and other services for enterprises; payment and escrow services; and movies, television series, variety shows, animations, and other video content.
Founded in 1999, headquartered in Hangzhou, China
CEO and Chairman: Yong Zhang
Number of employees: 122.400
Market Cap: $ 706.325 billion (as of 20/11/2020)
EV: $682.191 billion (20 Nov 2020)
LTM Revenue: $89,061.2mn