China's Alibaba Group is about to get a controlling stake of around $1 billion in Lazada Group that was announced Tuesday. It would be one of the biggest acquisitions to date with $500 million allotted to newly created shares and the rest to equity from present stockholders including Tesco Plc, AB Kinnevik and Rocket Internet.
The acquisition of Alibaba comes after Alibaba agreed to pay 2.06 Hong Kong dollars for the Hong Kong-based newspaper South China Morning Post in December. Chinese companies like Alibaba had been acquiring other companies as they spread their business to new areas to cope up with the slow growth in their home country. Based on a Dealogic data, these firms arranged to takeover on foreign industries like semiconductor and agriculture of up to $92.3 billion, as reported by The Wall Street Journal.
Lazada is like an Amazon-like retailer and a Singaporean startup that operates in the Philippines, Indonesia, Vietnam, Singapore, Thailand and Malaysia. It had raised funds of more than $700 million since its establishment in 2011. The company has about $250 million investment rounded by Temasek Holdings which is a Singaporean government investment arm in 2014.
Alibaba cited Lazada to provide a window into a budding but a very numerous online retailing market reaching to 560 million people. Alibaba participated in a $500 million round into Snapdeal, Flipkart's competitor and an Indian e-commerce startup, according to Forbes.
"The transaction will help us to accelerate our goal to provide the 560 million consumers in the region access to the broadest and most unique assortment of products," said Lazada Group CEO Maximillian Bittner in a statement.
The Jack Ma-led company has been emphasizing on both developing and mature e-Commerce markets outside its native country where it already gained 80% share.
"Globalization is a critical strategy for the growth of Alibaba Group today and well into the future... With the investment in Lazada, Alibaba gains access to a platform with a large and growing consumer base outside China, a proven management team and a solid foundation for future growth in one of the most promising regions for e-Commerce globally", said Alibaba's President Michael Evans as quoted by Nasdaq.
According to the agreement, Rocket Internet will sell a stake in Lazada of 9.1% or about $137 million and will keep an 8.8% stake. Tesco will sell an 8.6% equity stake for $129 million and Kinnevik with 3.8% stake amounting to $57 million.
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