Alibaba plan to pay 2.9 billion for 36.2% Sun Art

Chinese Internet giant Alibaba said on Monday that it would buy 36.16% of China’s top hypermarket operator, Sun Art Retail Group Ltd, for a total of $2.9 billion.

As part of a strategic alliance with Auchan Retail S.A. and Ruentex Group, Alibaba would buy the stake from Ruentex while Auchan Retail would boost its stake in Sun Art, the three companies said in a joint statement.

The alliance would target opportunities in China’s $500 billion food retail sector, where online and offline operators see benefits in joining forces to pool consumer data and enhance their competitiveness. Alibaba calls the strategy “New Retail”.

“Physical stores serve an indispensable role during the consumer journey, and should be enhanced through data-driven technology and personalised services in the digital economy,” Alibaba Chief Executive Officer Daniel Zhang said in the statement.

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The deal would give French retailer Groupe Auchan SA, Alibaba Group and Taiwanese conglomerate Ruentex 36.18 percent, 36.16 percent and 4.67 percent stakes respectively in Sun Art. Alibaba would replace Ruentex as the second-largest shareholder.

Alibaba has invested upwards of $9.3 billion in brick-and-mortar stores since 2015. It has launched many un-staffed concept shops in the past years, including grocery and coffee stores.

Sun Art operates about 450 hypermarkets across China under the RT-Mart and Auchan banners. It also operates unmanned stores under the Auchan Minute brand.

It has been slow to go online, with its platform Feiniu lagging bigger players like China Resources and Wal-Mart Stores Inc.

In a separate statement, Sun Art said Alibaba’s Taobao China Holding Ltd would make a general offer for the company at HK$6.50 apiece.

Trading in Sun Art shares, which were suspended on Nov. 13, will resume on Monday. The stock has risen 26.5 percent so far this year, lagging a 32.7 percent gain in the benchmark index.

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