The Alibaba Group corporate logo is displayed on a screen at the New York Stock Exchange during morning trading on February 14, 2024 in New York City.
Michael M. Santiago | Getty Images
Ali Baba It said on Tuesday it had canceled a planned initial public offering for its smart logistics unit Cainiao, adding to the former Chinese technology company's recent woes.
The postponement of the planned IPO — which would have been a boon for Alibaba, giving it a cash infusion through a major exit deal — comes after deteriorating market conditions in China.
Investors have been nervous about China lately, concerned about a series of issues including weak consumption, and the real estate and debt crises.
In a press release on Tuesday, Alibaba said it has withdrawn Cainiao's IPO application and listing application, and will also buy remaining shares in the company that it does not currently own.
Alibaba currently owns a 64% stake in Cainiao. It says it intends to invest up to $3.75 billion to acquire the remaining 36% from minority investors and employees with vested shares.
Alibaba Chairman Joe Tsai said in a statement that the company made the decision to withdraw Cainiao's planned IPO and instead take full ownership of the company because “we believe this is the right time to double down” on investment in the logistics business. .
Alibaba said the offer values Cainiao at $10.3 billion. Cainiao, which Alibaba first launched in May 2013, provides warehousing and fulfillment, last-mile delivery, pick-up locations, and reverse logistics services to customers of Alibaba's Taobao and Tmall e-commerce sites.
Hong Kong, where Alibaba and its Chinese tech counterparts Tencent, Baidu and JD.com are listed, has not followed the same upward trajectory as their US and European counterparts.
In the past 12 months, Hong Kong's Hang Seng Index has fallen by about 15%. On the other hand, the US Dow Jones Industrial Average and the Euro Stoxx 600 rose by 21% and 15%, respectively, during the same time period.
Technology stocks, in particular, have performed poorly in China. Alibaba shares are down nearly 18% over the past 12 months. Tencent, Baidu and JD.com shares fell by 20% and 30%. and 32%, respectively.
