Alibaba Group Holding Ltd. will invest about $3.6 billion ($4.89 billion) to double its stake in Sun Art Retail Group Ltd., taking control of one of China’s largest hypermarts to try and fend off rivals like JD.com Inc. in e-commerce’s hottest growth arena.
Alibaba will raise its direct and indirect stake in the grocery chain to about 72% by acquiring equity from Auchan Retail International SA, then make a general offer to shareholders to buy out the rest of Sun Art. The latter’s Hong Kong-listed stock leapt as much as 30% Monday, its biggest intraday gain since 2011.
The deal signals the intention of Asia’s most valuable corporation to try and dominate one of Chinese e-commerce’s largest untapped frontiers. Alibaba Chief Executive Officer Daniel Zhang has made expansion into physical retail and the grocery business, in particular, a cornerstone of his growth strategy, an effort that paid off during the coronavirus pandemic. Sun Art already operates hundreds of hypermarkets across China under the Auchan and RT-Mart brands, a massive distribution and storage network that can supplement Alibaba’s own efforts in fresh produce.