Alibaba Shares Acquisition of Suning Group Help Increase Share Prices
Online platform of Alibaba Group Holdings Taobao, recently acquired 1.861 shares of Suning Commerce Group for 28 billion yuan. the acquisition is the second biggest shareholder of the largest home appliance retailers in the country for stakes under 20 percent. The acquisition also saw Suning stock price advance ans surged 6.24 percent or 11.75 percent a share.
Initial announcement of the two groups was made public in August, a further sign of the integration of the two companies online and physical stores business as the company will be investing 14 billion yuan in acquiring a 1.1 stake in Alibaba. Suning’s current share price is at 11.06 yuan, while Taobao’s price is at 15.17 yuan per share. This will be 27.1 percent lower than the acquisition price indicating a loss of 7.6 billion yuan for the Taobao deal. Suning said that the funds raised by the acquisition is used for the development of logistics platform and its cloud store projects. Around 8.73 billion yuan is used on logistics and distribution projects ans 10 billion yuan will be used for the cloud store projects.
Meanwhile Alibaba achieved an annual revenue of 3 trillion yuan as Suning owns around 1,600 stores nationwide and 5,500 service network outlets. The two retail giants alliance with home appliance brands will help stimulate their sales. And Alibaba’s nearly 700 million users and Suning’s 1,600 physical stores will sell baby products to small and large home appliances, then the new model store will help the brands with resources in logistics, sales and big data.