HONG KONG (Nikkei Markets) -- Chinese e-commerce major Alibaba Group Holding said on Monday it will acquire a 36.16% stake in Sun Art Retail Group for about HK$22.4 billion ($2.88 billion) and form a three-way strategic alliance with France-based Auchan Retail and Taiwan's Ruentex Group to expand its presence in the mainland retail market.
The Hangzhou-based company, controlled by billionaire Jack Ma, said it will acquire the stake from Taiwan's Ruentex Group, and make an offer to buy out minority shareholders in Hong Kong-listed Sun Art Retail, which operates 446 hypermarkets in China under the RT-Mart and Auchan brands.
The investment follows Alibaba's moves earlier this year to buy an 18% stake in Hong Kong-listed Lianhua Supermarket Holdings, and separately invest $300 million in a funding round at Yiguo.com, an online marketplace for fresh produce.
"The acquisition by Alibaba is part of its investment diversification," said Andy Kwan, a Hong Kong-based director at ACE Centre for Business and Economic Research. "The company is trying to expand its retail business from both online and physical stores."
Alibaba acquired the stake in Sun Art Retail at HK$6.50 per share -- a sharp discount to the target company's current share price -- and said it will separately make a "possible" mandatory cash offer for Sun Art Retail shares at the same price.
Shares of Sun Art Retail were 0.9% lower at HK$8.52 in late-morning trading in Hong Kong on Monday as trading resumed after being suspended on Nov. 13, pending the announcement.
Ruentex will own a 4.67% stake in Sun Art Retail following the transactions, while Auchan Retail, which is also increasing its stake in Sun Art Retail, will hold a 36.18% stake and continue to consolidate the Chinese company into its financials.
"Physical stores serve an indispensable role during the consumer journey, and should be enhanced by data-driven technology and personalized services in the digital economy," Daniel Zhang, chief executive of Alibaba Group, said in a joint statement by the three companies.
Wilhelm Hubner, chief executive of Auchan Retail, said the alliance will allow them to serve a "fully integrated" in-store and online shopping experience to hundreds of millions of Chinese consumers.
Peter Huang, vice chairman of Ruentex Group, said Sun Art Retail is making efforts to "move from offline to online" as consumer demands have changed "tremendously" in recent years with the rapid growth of mobile internet.
-- Carrie Chen
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