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Chinese e-commerce major Alibaba Group has agreed to divest its interest in the Sun Art Retail Group, a hypermarket operator, to Paragon Shine for K$12.29bn ($1.58bn).
The buyer is an exempt company incorporated in the Cayman Islands with limited liability. It is 100% indirectly owned by DCP Capital Partners II under DCP Capital, an alternative asset management company focused on private equity investments.
The transaction involves the sale of a 78.7% stake currently held by Alibaba's subsidiaries A-RT Retail, Taobao China and New Retail, as detailed in a disclosure to the Hong Kong Stock Exchange.
In 2020, Alibaba invested $3.6bn to acquire a controlling interest in Sun Art, aiming to integrate its digital capabilities with the hypermarket chain's extensive presence in China.
Alibaba will relinquish all equity interests in Sun Art, which will subsequently be excluded from Alibaba's consolidated subsidiaries.
The capital generated from this sale is earmarked for strategic business initiatives, enhancing shareholder value, and general corporate functions.
This disposal reflects Alibaba's strategy to liquidate non-essential assets and reallocate resources towards bolstering its primary business sectors while continuing to prioritise shareholder returns.
The company expresses continued optimism regarding the potential of China's consumer sector and commits to driving industry-wide quality growth through technological advancements that elevate the consumer experience.
The board of directors has reviewed the share purchase agreement terms and concluded that they are commercially standard as well as fair and reasonable, serving the best interests of both the company and its shareholders.
The divestiture is indicative of Alibaba's strategic refocusing on its foundational e-commerce operations amidst the evolving retail landscape.
Alibaba recently sold its stake in Intime, a department store chain, at a significant loss of $1.3bn, to a consortium led by Youngor Group and members of Intime's management team.
"Alibaba to sell majority stake in Sun Art hypermarkets for $1.58bn " was originally created and published by Retail Insight Network, a GlobalData owned brand.
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