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Alibaba invests $361 million in Haier

Staff writer |
Alibaba Group will invest $361 million in appliance maker Haier Electronics Group in a deal aimed at expanding Alibaba's logistics reach to the millions of consumers in China.

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Online retail is booming in China and Alibaba is seeking to develop Haier's distribution network for large-sized goods into a logistics platform that will reach lesser developed cities and which other companies can also use.

For Haier, the partnership with China's biggest e-commerce firm will further its expansion into online retail and logistics, a strategy aimed at giving it an edge in the fierce battle for margins in the world's biggest appliance market. Shares in Haier, in which KKR-backed Qingdao Haier owns a 47.8 percent stake, soared 20 percent to their highest in nearly 14 years after the deal was announced.

"This collaboration with Haier Group is a win-win-win partnership," Jack Ma, executive chairman of Alibaba Group, said in a joint statement. China's vast interior is expected to see rapid retail growth as more people move into urban areas and their spending power increases.

The agreement will see Alibaba acquiring a 9.9 percent stake in Haier's online marketplace Goodaymart, which under the joint venture, will form the basis of a logistics platform for large-sized goods that can be used by other companies as well.

Alibaba will also buy HK $1.316 billion worth of convertible bonds which can either be turned into shares in Hong Kong-listed Haier or a 24.1 percent stake in the joint venture. It will also subscribe to about 2 percent of Haier Electronics' enlarged share capital for HK$965 million, the statement said.

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