Ali shot again, this time to detonate the retail industry!
Alibaba made a decision to let the company’s share price take off.
On the morning of October 19th, Alibaba announced that it had agreed to acquire 70.94% equity of Jixin Holdings through its subsidiary Taobao China at a cash price of HK$ 8.1 per share, totaling about HK$ 28 billion. Jixin Holdings holds 51% equity of Gaoxin Retail, a Hong Kong-listed company.
If the acquisition is successful, Alibaba and its related parties will become the controlling shareholders of Gaoxin Retail with a shareholding of about 72%, and will also comprehensively record Gaoxin Retail in its financial statements.
Driven by this news, Gaoxin Retail opened 11% higher this morning, and then continued to soar, once rising nearly 30%, with a market value close to HK$ 100 billion. At the close, the retail increase of Gaoxin dropped to 19.17% to HK$ 9.45.
Share price performance of Gaoxin Retail today
Alibaba successfully bottomed out.
Judging from the stock price trend of Gaoxin Retail this year, Alibaba’s shareholding is undoubtedly a successful bargain-hunting. Prior to this, Gaoxin Retail’s share price has fallen by more than 40% since the second half of the year, and once fell to HK$ 7.57 in early October, falling to a one-year low.
Gaoxin Retail’s share price chart this year.
According to the data, Gaoxin Retail is mainly engaged in the business of hypermarkets and e-commerce platforms, and its two hypermarkets brands are Auchan and RT Mart. As of June 30th, Gaoxin Retail has 481 hypermarkets and 3 medium-sized supermarkets, with a total construction area of about 12.97 million square meters.
The relationship between Alibaba and Gaoxin Retail can be traced back to 2017. At that time, Alibaba invested about HK$ 22.4 billion through Taobao China, and directly and indirectly acquired a 36.16% stake in Gaoxin Retail. After that transaction, Ali became the second largest shareholder of Gaoxin Retail, and its shareholding ratio was second only to Auchan Retail’s 36.18%.
At that time, after Alibaba became a shareholder in Gaoxin Retail, there was constant speculation about whether Ali would privatize Gaoxin Retail. Gaoxin Retail clearly revealed in the latest announcement that Alibaba will maintain the company’s listing status after the relevant offer deadline.
According to Alibaba’s announcement, according to the Code of Takeovers and Mergers of Hong Kong Companies, after the share purchase, Taobao China will have to make a mandatory and unconditional comprehensive takeover offer for all the issued shares of Gaoxin in cash at the offer price of HK$ 8.10 per share.
According to the comprehensive tender offer, Taobao China may have to pay an additional maximum of about HK$ 17 billion to acquire the shares of Gaoxin held by other shareholders. This means that Alibaba’s acquisition of Gaoxin retail shares will cost up to HK$ 45 billion.
Equity structure of Gaoxin Retail after this transaction.
Regarding the latest acquisition, Alibaba said that the initial idea of cooperation with Gaoxin Retail has all come true today: 484 stores of Gaoxin Retail in RT Mart and Auchan Supermarket have been fully online, and they have been connected to Hungry, Taoxianda and Tmall Supermarket to share their inventory business. All stores provide one-hour delivery within 5 kilometers of the store, of which 180 stores support half-day delivery within 20 kilometers.
According to the semi-annual report of Gaoxin Retail, as of June 30th, the new retail solutions provided by Alibaba boosted the same-store sales of stores by 5.7%, and the company’s net profit increased by 16.8% year-on-year, bringing nearly 50 million users and nearly 13 million active users to Gaoxin Retail.
Gaoxin Retail said in the latest announcement that Alibaba and the company believe that strengthening the alliance between the two parties will enable the company’s business to continue to benefit from Alibaba’s electronic ecosystem, thus bringing more online traffic to the company, better synchronizing inventory management online and offline, and improving distribution capabilities. Company stores will continue to be electronic and new retail solutions will be introduced.
It is understood that the digital experience of Alibaba and Gaoxin Retail in the new retail of Shangchao Store has been opened to offline supermarkets such as Sanjiang Shopping, Xinhuadu, Zhongbai, Lotus, and Greenland Optimization, helping more than 50 Shangchao retail brands across the country to promote digital transformation.
Ali accelerates the expansion of retail territory
In recent years, Alibaba has continuously accelerated its territory expansion through investment and mergers and acquisitions, and the core business and new retail areas are also an important part.
Just earlier this month, a number of media publicly reported that Alibaba and Dufry, the world’s largest duty-free merchant, would set up a joint venture in China, with Alibaba and Dufry holding 51% and 49% shares respectively; At the same time, Alibaba will take a strategic stake in Dufry, and plans to hold no more than 9.99% of Dufry’s shares. The main purpose of this cooperation is to jointly explore and invest opportunities in China’s tourism retail industry and accelerate the digital transformation of Dufry.
If Alibaba really succeeds in holding hands with Dufry, it will undoubtedly bring a lot of changes to the competitive landscape of the domestic duty-free market. At present, Alibaba has not responded positively to the above news, but the company’s layout in the new retail field has never stopped, or it can be seen through the following picture.
Sorting out Ali’s key minority equity investment in the retail field in Guojin Securities Research Report
Guojin Securities believes that for Ali, who has dominated the online retail market and established a sound infrastructure, he undoubtedly hopes to find a suitable angle to cut into the offline and open his ceiling in the domestic retail market from a long-term perspective, and new retail will emerge as the times require.
Guojin Securities said that in the face of decentralized offline retail, on the one hand, Ali hatched a new business model through consumer insight and technology-Box Horse Fresh Life; On the other hand, it also tries to cooperate with traditional retailers such as Suning.cn, RT Mart and Easyhome, to reconstruct their business through digital operation and increase online and offline consumption scenarios, so as to improve sales efficiency. Moreover, Alibaba’s continuous growth of free cash flow is also providing strong support for the company’s continuous layout and investment in the future.
Original text transferred from: shanghai securities news
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