China’s Sun Art Retail Group Shares Slump After Alibaba Announces $1.58 Billion Stake Sale
Shares of China’s Sun Art Retail Group (HK:) plummeted over 30% on Thursday after Alibaba Group (NYSE:) (HK:) announced the sale of its majority stake in the hypermarket chain to Chinese private equity firm DCP Capital for HK$12.30 billion ($1.58 billion). Alibaba will sell its 78.7% stake in Sun Art it held via its subsidiaries, as revealed in a Hong Kong Stock Exchange filing on Wednesday.
Alibaba acquired the controlling stake in Sun Art in 2020 for $3.6 billion, aiming to integrate its digital expertise with the chain’s extensive network of hypermarkets across China. However, the sale price of $1.58 billion is significantly lower than the purchase price, in line with Alibaba’s strategy to streamline its business operations and focus more on its core e-commerce activities.
Alibaba stated in a statement, “The disposal is considered to be a good opportunity for the company to monetize its non-core assets and to utilize such proceeds to better focus on the development of its core businesses and enhance its shareholder return.”
Additionally, Alibaba will also offload its Chinese department store unit, Intime, despite anticipating a $1.3 billion loss from the deal. The sale of Sun Art and Intime is part of Alibaba’s broader strategy to consolidate its business operations, having unveiled plans to merge its domestic and international e-commerce platforms into a unified business unit under a single leadership.