Alibaba Group has called off plans to spin off its logistics unit, just a few months after the Chinese internet giant similarly canceled plans to launch an initial public offering for its cloud-computing business. U.S. listed Alibaba stock was trading flat following the news Tuesday.
Alibaba was planning to list its Cainiao Smart Logistics Network subsidiary on the Hong Kong Stock Exchange. But the e-commerce company announced early Tuesday that it has withdrawn that plan. Instead, Alibaba is offering to buy shares from Cainiao's minority shareholders for up to $3.75 billion. The Cainiao initial public offering plan was part of a major restructuring effort that Alibaba announced last year.
"Given the strategic importance of Cainiao to Alibaba and the significant long-term opportunity we see in building out a global logistics network, we believe this is an appropriate time to double down on Alibaba's investment in Cainiao," Alibaba Chairman Joseph Tsai said in a company blog post.
On the stock market today, Alibaba stock is trading flat at 71.28.
Alibaba's Shifting Restructuring Plan
The announcement brings the latest blow to a major restructuring effort that Alibaba announced roughly one year ago. The firm said in March 2023 it would break its business into six separate entities, including one for its e-commerce efforts and for its cloud-computing division. The company's U.S.-listed shares surged on the announcement.
In November, Alibaba put its plans for the cloud spinoff on hold. Alibaba stock tumbled on the announcement. The firm blamed U.S. export restriction on advanced computing chips.
But Alibaba also delayed a spinoff plan for its Freshippo grocery unit late last year, citing market conditions.
Alibaba Stock: Down 16% Over Past 12 Months
The restructuring announced last year was designed to "unlock shareholder value and foster market competitiveness," the company said. Alibaba stock as struggling at the time with an uncertain Chinese economy and a continuing regulatory crackdown on tech companies by the Chinese government.
Things have hardly improved for Alibaba stock. Shares lost 12% in 2023 and are down 16% over the past 12 months.
The struggles have come amid concerns about the broader Chinese economy. At the same time, Alibaba has faced increased competition from PDD Holdings, which operates discount shopping website Pinduoduo in China and Temu internationally.
