Alibaba To Invest $692M In Intime Retail Ahead Of IPO

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Intime Retail is a Chinese department and supermarket-store opearator that Alibaba hopes will help it grow its presence in the physical world by gaining access to its roughly 25 stores located throughout China. Alibaba is looking for cooperative arrangements that will allow Chinese shoppers to purchase items with their smartphones as it ramps up its mobile war with Tencent Holdings Ltd (HKG:0700) (OTCMKTS:TCEHY).

In a statement, Alibaba said that it would take a 9.9% equity stake in Intime for $214 million and subscribe to $478 million in convertible bonds, which if converted would give Alibaba no less than an additional 25% stake in Intime. This is just the latest in a number of acquisitions that the Chinese Internet’s “big three” have made in the last couple of years. Not unlike Google, Facebook, and Apple which compete all over the Internet in the United States, Alibaba finds itself in a battle with social media and games giant Tencent Holdings Ltd (HKG:0700) (OTCMKTS:TCEHY) and the search provider Baidu Inc (ADR) (NASDAQ:BIDU) as they buy up or partner up with considerably smaller companies.

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Alibaba’s other acquisitions

In the last year alone, Alibaba laid out $586 million for an 18% stake in the “Chinese Twitter,” Weibo. In July, it took an undisclosed stake in Qyer.com, a Chinese travel website. August was quiet on the acquisition front, but in late September Alibaba bought another undisclosed stake in Kanbox, a Chinese cloud-storage provider. In February of this year, Alibaba offered over $1.1 billion for the mapping company AutoNave of which the company had already bought a 28% state in May of 2013. March saw two other deals in addition to today’s announcement. On the 12th, they paid $804 million for a 60% state in the TV and film-production company ChinaVision Media and just ten days ago the company invested $215 million for Silicon Valley startup TangoMe which owns an increasingly popular messaging app.

Chinese consumers are more and more, like consumers elsewhere, using mobile devices as their primary means by which they access the Internet and are looking to bring more and more people to their existing platforms as well as explore other technologies.

Online-to-offline

Alibaba is expected to go public shortly with one of the largest initial valuations of up to $200 billion but still lags behind Tencent Holdings Ltd (HKG:0700) (OTCMKTS:TCEHY) whose WeChat counts over 355 million monthly users who use smartphones on its variety of social-networking offerings.

Alibaba said in the release it would “explore opportunities to combine the strengths of Alibaba’s Internet commerce technology and platforms with Intime’s physical retail presence in high-end department stores and shopping malls.”

Alibaba, just like Amazon.com, Inc. (NASDAQ:AMZN), is in possession of huge amounts of user data and a large network of advertisers and will look to malls and restaurants to build its “online-to-offline” business.