Alibaba leads bid to take HK retailer Intime private in $2.6b deal

REUTERS/Brendan McDermid

Alibaba Group Holding Ltd. is leading a bid to take department store operator Intime Retail Group Co. private, as China’s largest online retailer seeks to deepen its integration with brick-and-mortar stores.

Alibaba and Intime’s founder Shen Guojun will pay HK$10 for the Intime shares they don’t already own, according to a statement to the Hong Kong stock exchange. The offer represents a 42 percent premium over the last closing price, and the maximum amount of cash required, including options, is about HK$19.8 billion ($2.55 billion).

Alibaba and Intime have been building their relationship for years. Alibaba originally took a stake in the retailer in 2014 and Alibaba Chief Executive Officer Daniel Zhang became Intime chairman the next year. The partnership already gives Alibaba access to Intime’s inventory and allows its online customers to pick up orders from physical stores. Privatization will allow Intime to work more closely on integrating online and offline shopping with a separate group of shareholders.

“Alibaba will be able to do more experiments with Intime in the retail sector,” said Ray Zhao, a Shenzhen-based analyst at Guotai Junan Securities Co. “Intime’s valuation is relatively low now so it would be a good time to buy.”

Intime shares, which were halted since Dec. 28 pending an announcement, had fallen 8 percent in 2016, compared with the 0.4 percent drop in the city’s benchmark Hang Seng Index. Alibaba gained 8.1 percent last year in New York.

Alibaba is one of China’s most aggressive deal-makers. It announced 35 deals over the past 12 months with a total value of $15.2 billion, according to data compiled by Bloomberg.

Alibaba has bought or invested in a number of physical retail chains, including Suning Commerce Group Co., and Haier Electronics Group, as it tries to revamp the country’s $4.5 trillion traditional retail industry. Founder and billionaire Jack Ma’s goal is to replace distributors and middlemen and let stores buy directly from suppliers based on real-time demand and inventory. The deals flesh out its own online shopping offerings, open sales channels, and expand its logistics network.

Alibaba also sees an opportunity in helping Chinese brands upgrade their computer systems, letting them adjust inventories more quickly in response to demand — an undertaking that now requires several layers of reporting between stores and the brand.

Ma has said that he sees “tremendous challenges” for pure e-commerce operators as country’s economy slows.

“The most important opportunity on the horizon is not growing online sales in isolation but rather helping traditional retailers upgrade into a brand new retail model,” CEO Zhang said in October.

Ma met with U.S. President-elect Donald Trump on Monday to discuss how the company could add U.S. businesses to its platform. The Chinese e-commerce giant said it could help create 1 million jobs by adding 1 million small and medium-sized U.S. businesses to its site.

Alibaba owns about 27.8 percent of Intime and Shen owned 9.17 percent of shares as of Tuesday, according to the filing.

Intime operated and managed a total of 29 department stores and 17 shopping malls in China as of end-June last year, mainly in eastern Zhejiang province, according to the company’s semi-annual report. It also has stores throughout China including in Beijing, Anhui province and Guangxi province.

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Bloomberg

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.