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Alibaba to invest $2.88bn to buy stake in Sun Art Retail

RBR Staff Writer Published 21 November 2017

Chinese ecommerce giant Alibaba Group is acquiring a $2.88bn stake in Sun Art Retail from Ruentex Group.

Alibaba Group, Auchan Retail and Ruentex announced a strategic alliance that brings together their online and offline expertise to explore new retail opportunities in China’s food retail sector.

Alibaba will acquire an aggregate stake 36.16% in Sun Art from Ruentex while, Auchan Retail and Ruentex will retain 36.18% and 4.67% stakes respectively.

After the acquisition is completed, Auchan Retail will continue to consolidate Sun Art in its financials. Sun Art is a multi-format offline food retailer in China.

The company operated a total gross floor area of about 12 million m2 with 446 hypermarkets across 29 provinces, autonomous regions and several municipalities in the country under the RT-Mart, Auchan brands. It also operates superstores and unmanned stores under the ‘Auchan Minute’ brand.

The stake acquisition is Alibaba’s new retail vision to use internet-based approach as well as new technology, while working with retail partners to provide seamless online and offline experiences to customers in China.

Alibaba Group CEO Daniel Zhang said: “Physical stores serve an indispensable role during the consumer journey, and should be enhanced through data-driven technology and personalized services in the digital economy.

“By fully integrating online and physical channels together with our partners, we look forward to delivering an original and delightful shopping experience to Chinese consumers.”

From 2015, Alibaba has invested more than $9.3bn in physical stores and has also opened several unmanned concept shops last year, reported CNBC.

Based on the three companies’ strengths, the alliance is planning to provide new shopping experience through Sun Art to the Chinese population. The alliance will let Sun Art benefit from Alibaba’s digital ecosystem.

It can also help in digitalization and introduce new retail solutions at Sun Art stores such as online and offline integration along with offering modern fulfillment and personalized customer experience.

Ruentex Group vice chairman Peter Huang said: “In recent years, consumer’ demands have changed tremendously with the rapid growth of the mobile internet, and Sun Art is also endeavoring to move from offline to online.

“Ruentex is delighted to see the win-win collaboration between Sun Art and Alibaba with high synergies in online and offline that will meet the needs of consumers for a better life with better products and services and higher efficiency.”

Image: Alibaba Group's corporate campus in Xixi, Hangzhou, China. Photo: Courtesy of Alibaba Group Holding Limited.