Alibaba Looks to Bricks and Mortar With Bid for Mall Operator in China
HONG KONG — Alibaba is pushing further into the very sector that it helped to disrupt with a $2.6 billion bid for Intime Retail, a department store and mall operator in China.
Alibaba, a Chinese e-commerce behemoth, already owned 28 percent of Intime, which is listed in Hong Kong, and made an offer with Shen Guo Jun, the founder of the department store chain, to take the company private.
The buyers have offered 10 Hong Kong dollars, or about $1.29, per Intime share, a 42 percent premium over its closing price on Dec. 28, when trading of its stock was suspended. The deal, which is subject to shareholder approval, would give Alibaba a controlling stake of about 74 percent.
The takeover of Intime is part of a strategy that makes Alibaba a rarity among major global e-commerce companies — it has spent billions buying up pieces of the very retail sector it disrupted.
The e-commerce giant argues that physical retailers will remain relevant and can be improved with technology. In that respect, it seems to be in agreement with its American peer, Amazon, which has begun experimenting with physical shopping spaces. But unlike Alibaba, Amazon has been opening its own stores.
Alibaba has also bucked the trend among its peers with logistics. Unlike Amazon and JD.com, its Chinese rival, Alibaba has shied away from owning its own inventory or trying to build out logistics.
Although China is the world’s largest delivery market, the country is still struggling with decades of underinvestment in inland logistics. This has given rise to a raft of businesses that specialize in ferrying goods to people’s homes. Alibaba comprises the majority of business for one courier, ZTO Express, which raised $1.4 billion in an initial public offering last year.
But as a result, Alibaba has also made a number of recent acquisitions and investments that seem designed in part to bolster an alliance of logistics companies that it has organized to support its enormous e-commerce sites. It took a stake in another courier company, YTO Express, with the aim of improving its rural delivery service.
That Alibaba begins the year with a major acquisition shows that the company has no intention of slowing its merger binge. Even as some have wondered how the company can digest and manage the myriad strategic investments and acquisitions it has made in recent years, it seems set to continue buying where it sees opportunities.
Alibaba said in a news release that by merging its data with Intime’s, it could get better information on customers, both online and offline, and improve inventory management.
“We don’t divide the world into real or virtual economies, only the old and new,” Daniel Zhang, the Alibaba chief executive, said in the news release. “Those who cling on to the old ways of retailing will be disrupted, and brick-and-mortar businesses will be able to create value for consumers if they are integrated with the power of mobile reach, real-time consumer insights, and technology capability to improve operating efficiency.”
Shares in Intime rose 35 percent on Tuesday, the first full day they were allowed to trade after the suspension.