Alibaba Group to buy 36.2% in China's hypermart operator Sun Art Retail for $2.87 bn

Chinese e-commerce giant Alibaba Group Holding Ltd today said that it would invest HK$22.4 billion ($2.87 billion) for a 36.2-per cent stake in China's leading hypermart operator, Sun Art Retail Group Ltd.

As part of the deal, French retailer Auchan Retail SA will raise its stake in Sun Art to a similar level and form an alliance with the internet giant to tackle Chinese food retail.

Hangzhou-based Alibaba Group said in a filing that its subsidiary Taobao China Holding will buy a direct 26-per cent stake in the company from Kofu and Concord Greater China for HK$16.1billion ($2.1bn), at around HK$6.50 a share.

In addition, Taobao will also buy 19.9-per cent stake in A-RT, which owns a 51-per cent stake in Sun Art, for HK$6.3 billion, or HK$6.50 a share, which will bring its total stake in Sun Art to 36.2 per cent.

The deal would give Groupe Auchan, China's Alibaba Group and Taiwanese conglomerate Ruentex 36.18 per cent, 36.16 per cent and 4.67 per cent stakes respectively in Sun Art.

Alibaba Group, run by Jack Ma, said that the strategic alliance with Auchan Retail and Ruentex will bring together their online and offline expertise to explore new retail opportunities in China's food retail sector.

Sun Art Retail Group is a leading multi-format offline food retailer in China. The company has a nationwide footprint and operates under two brands, Auchan and RT-Mart.

It employs nearly 140,000 people, operates 490 multi-formatted stores, across 224 cities in 29 provinces, autonomous regions and municipalities in China.

''Alibaba is excited to join with our new partners to redefine traditional retail through digital transformation,'' said Daniel Zhang, CEO of Alibaba Group. ''Physical stores serve an indispensable role during the consumer journey, and should be enhanced through data-driven technology and personalized services in the digital economy.''

Wilhelm Hubner, CEO Auchan Retail, said, ''This alliance with Alibaba stems from our shared vision for the future of commerce in China. Bringing together the leaders of in-store retail and of online retail will allow us to serve hundreds of millions of Chinese consumers a fully integrated, world-class shopping experience.''