Alibaba Acquiring 35% Share of Intime Retail for $692 Million
Alibaba Group Holding said on Monday it has agreed to take a stake of 35% worth $692 million in Intime Retail, the department store operator in China, the e-commerce company’s bid to link online shopping with retail stores that are brick and mortar.
The new deal will help e-commerce giant Alibaba increase its presence at Intime’s more than two dozen stores throughout China through initiatives like cooperation allowing shoppers to pay for products with their smartphones.
Alibaba has competed with Tencent Group Holdings, it biggest rival, to attract consumers in China, as more people are starting to use their smartphones for everything from booking restaurants to hailing a cab to buying new clothing.
In a company statement, Alibaba announced that it would take an equity stake of 9.9% in Intime for a price of $214 million, as well as subscribe more than $478 million of convertible bonds, which if they were to be converted would give Alibaba a minimum of 25% more in Intime.
This new investment comes at a time when the largest companies on the Internet in China continue on their investment spree. Three big players in the Internet sector in China – Alibaba, Tencent, the games and social media company and Baidu, Inc a search provider, are competing against one another by forming alliances and buying smaller businesses.
The consolidation process is driven partly by the changes in which people in China are accessing services online as more consumers use their smartphones as their primary tool to gain access to the Internet.
The three large companies have been seeking alliances that would bring additional users to platforms they own or to offer content, technology or services that those companies do not have already.
Alibaba is closely held and is planning possibly one of the largest Internet sectors’ initial public offerings in history and has faced huge competition from rival Tencent.
Analysts said that Tencent, with its WeChat application for mobile messaging has over 335 million users on average each month and for now owns the advantage of engaging users of smartphones due to is social networking functions that are widely used.