Alibaba will subscribe to a private placement in Sanjiang to raise up to be equivalent to a 25% stake in the supermarket operator. Sanjiang also plans to issue up to USD 27.26 million worth of exchangeable bonds to Alibaba. Alibaba will also acquire another 9.3% stake for USD 63.51 million via a share transfer.
Alibaba’s stake in Sanjiang will rise to 32% after the share transfer and share subscription, according to Sanjiang. This is above the 30% threshold where a company is required to make a full takeover bid in China.
Alibaba will need approval from Sanjiang’s shareholders to waive this requirement. Sanjiang said it aims to use Alibaba’s ecommerce platform to make the most of the increasingly competitive bricks-and-mortar retail sector as China’s economic growth slows.
In early November 2016, Alibaba posted a 55% rise in Q2 revenue, indicating that it could generate strong growth despite worries about the health of China’s economy and its retail sector.
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