Alibaba Group said Thursday that it would sell its majority stake in Chinese retail operator Sun Art in a $1.6 billion deal as it focuses on its core e-commerce business. U.S.-listed Alibaba stock edged lower in early trades.
Alibaba said in a regulatory filing on Wednesday that it will sell its stake in the hypermarket company to Chinese private equity firm DCP Capital. Alibaba expects to book a loss of roughly $1.8 billion on the deal. But the deal represents a chance for Alibaba to "monetize its non-core assets and to utilize such proceeds to better focus on the development of its core businesses and enhance its shareholder return," the tech giant said in a filing.
Alibaba paid a reported $3.6 billion for a controlling stake in Sun Art in 2020.
On the stock market today, Alibaba stock is down just under 1% at 84.09 in premarket action.
Alibaba Stock: 10% Gain In 2024
Alibaba also recently sold its stake in department store business Intime at a $1.3 billion loss. It also announced a new joint-venture for its South Korea operations. The deals come as Alibaba is restructuring its e-commerce operations. The tech giant said in November that it would combine its domestic Taobao and Tmall Group with its international e-commerce operations into a single business division.
Last year was another so-so effort for Alibaba's U.S.-listed shares, as the company grappled with investor concerns about the broader Chinese economy. The stock gained 9% overall but still remains well below highs reached late in 2020.
Alibaba shares rallied 27% in late September as government officials in China first rolled out stimulus plans. But the gains have faded as investors debate the strength of China's stimulus efforts and the potential impact for the Chinese economy from tariffs by President-elect Donald Trump on imports into the U.S.
Alibaba stock lost 8% in October trading, 10% in November and slipped another 3% last month.
Alibaba stock has an IBD Composite Rating of 55 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
