The Alibaba Group Corporation logo is displayed on the screen of the New York Stock Exchange during early trading in New York City on February 14, 2024.
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Alibaba On Tuesday, the company said it would cancel plans for an initial public offering of its smart logistics unit Cainiao, adding to the former Chinese tech darling’s recent woes.
A planned initial public offering (IPO) has been put on hold after market conditions in China deteriorated – a good thing for Alibaba, allowing it to inject cash and strike a key exit deal.
Investors have soured on China recently due to a series of problems including weak consumption, real estate and debt crises.
Alibaba said in a press release on Tuesday that it would withdraw Cainiao’s initial public offering and listing application and would purchase the remaining shares in the company that it does not currently own.
Alibaba currently holds 64% of Cainiao. The company said it plans to invest up to $3.75 billion to acquire the remaining 36% from minority investors and vested employees.
Alibaba Chairman Joe Tsai said in a statement that the company decided to cancel Cainiao’s initial public offering plan and instead fully own the business because “we believe now is the right time to double down on our investment in the logistics business.”
Alibaba said the acquisition valued Cainiao at $10.3 billion. Alibaba first launched Cainiao in May 2013 to provide warehousing and distribution services, last-mile delivery and pickup, and reverse logistics to customers of Alibaba’s Taobao and Tmall e-commerce sites.
Alibaba and Chinese tech peers Tencent, Baidu and JD.com are listed in Hong Kong but have not followed the same upward trajectory as their U.S. and European counterparts.
Hong Kong’s Hang Seng Index has fallen about 15% in the past 12 months. On the other hand, the US Dow Jones Industrial Average and the European Stoxx 600 Index rose 21% and 15% respectively during the same period.
Technology stocks in particular have underperformed in China. Alibaba shares have fallen nearly 18% in the past 12 months. Tencent, Baidu, and JD.com fell 20% and 30% respectively. and 32%.
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