Alibaba Group Holding said on Tuesday it has scrapped plans to list its logistics unit Cainiao in Hong Kong as it prioritizes growing its e-commerce business in the face of a difficult IPO market environment.
HONG KONG — Alibaba Group Holding said on Tuesday it has scrapped plans to list its logistics unit Cainiao in Hong Kong to prioritize growth of its e-commerce business in the face of a difficult IPO market environment.
Alibaba announced on Tuesday that it has withdrawn its initial public offering and listing application and instead proposed to buy all outstanding shares of Cainiou Smart Logistics Network.
The buyback offer values Cainiao at $10.3 billion. Alibaba currently owns 64% of the logistics unit, and the proposed takeover would allow minority shareholders to sell their stakes to Alibaba.
“Given Cainiao's strategic importance to Alibaba and the significant long-term opportunity in building a global logistics network, we believe now is the right time to double down on Alibaba's investment in Cainiao. Alibaba Chairman Joe Tsai said. group.
The company also said that under current market conditions, it is “unlikely that a valuation” that reflects Cainiao's strategic value to Alibaba's business will be achieved.
The IPO cancellation comes as Alibaba focuses on growing its cloud computing and e-commerce businesses. Alibaba's e-commerce business is under pressure from rivals such as PDD's Pinduoduo and ByteDance's Douyin, which often offer products at lower prices.
Cainiao handles the majority of Alibaba's e-commerce logistics and operates a global logistics network that facilitates cross-border e-commerce.
Alibaba restructured its business in March last year, splitting it into six divisions that would eventually be self-financed and taken public.
The company's cloud unit was expected to be one of the first to go public, but Alibaba later cited uncertainty over U.S. export restrictions on advanced chips used in artificial intelligence. , withdrew plans to spin off the business.
