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Alibaba Group Holding Ltd. has reached an agreement to sell its majority stake in Sun Art Retail Group, one of China’s leading hypermarket chains, to the private equity firm DCP Capital for approximately $1.58 billion. The deal involves the transfer of a 78.7% stake, which Alibaba acquired in 2020 for $3.6 billion.
This divestment is part of Alibaba’s broader strategy to focus on its core e-commerce business, amidst significant restructuring efforts. To increase its competitiveness, especially against rivals like Pinduoduo and TikTok, Alibaba is combining its domestic and international e-commerce operations. This move is part of broader adjustments to streamline its business structure and improve efficiency.
In addition to the Sun Art sale, Alibaba is also offloading its department store chain Intime, which is expected to incur a loss of around $1.3 billion. These actions are taken in response to a difficult consumer climate and growing competition in China’s retail market. Alibaba hopes to increase its focus on e-commerce in China and abroad and streamline operations through these divestitures.
In the upcoming months, the Sun Art sale is anticipated to close, subject to regulatory approval. Furthermore, with a market share of 29.9% in the first half of 2023, Alibaba continues to dominate the Chinese cloud service industry, with Huawei and China Telecom following at 13.2% and 12.2%, respectively.
