Citing information from direct involved sources, China based e-commerce giant Alibaba Group Holding Ltd (BABA) is planning to acquire stake of up to 10% in Yunda Holding Co Ltd (002120). Following this deal, Alibaba will become the fifth largest investor in Yunda.
Alibaba is aiming at buying this additional stake from Yunda’s founding partners and couple Nie Tengyun and Chen Liying. Through their solely owned investment firm Shanghai LuoJieSi Investment Management, the couple owns a 52.19% controlling stake in Yunda.
Calculating this stake using current share’s market price the stake is estimated to be worth around $790 million.
According to the sources who declined being revealed since they aren’t allowed to speak to the media concerning company’s affairs, there is a very high possibility of Alibaba buying up to 15% stake of Shenzhen-listed Yunda.
According to China rules, any stake above 5% of a domestically listed company attracts a discount of up to 10% in relation to the company’s share price on the last trading day before the deal was closed.
If the deal sails through then it would speed up Alibaba’s efforts to penetrate the fast growing express delivery industry in China.
According to data from State Post Bureau, domestic delivery firms in China dispatched 63 billion parcels in 2019 denoting a 23% increase from what they dispatched in 2018. Year on year revenue for the express delivery industry increased by 23% to 745 billion yuan ($104.95 billion) in 2019.
Last year Alibaba also acquired a 14.65% stake in a express delivery company, STO Express Co Ltd (002468) in a deal worth 4.66 billion yuan.