Alibaba to invest $2.9 bn in Sun Art, aims to combat Wal-Mart

Alibaba

In an attempt to expand its reach in the retail world, Alibaba announced on Monday that it would take a 36% stake in Sun Art Retail Group from Taiwanese conglomerate Ruentex Group for $2.9 billion.

Sun Art operates about 400 hypermarkets under the Auchan and RT-Mart banners and is building a line of unmanned stores. French firm Auchan Retail holds roughly equal stakes as Alibaba in Sun Art.

“Alibaba is excited to join with our new partners to redefine traditional retail through digital transformation,” chief executive Daniel Zhang said in a statement.  

In recent years, with an aim to connect its online and offline portfolio of businesses, the Chinese e-commerce giant has invested heavily in several Chinese grocers, shopping malls and department stores.

As per the Bloomberg report, Alibaba and Auchan form an alliance to tackle the same Chinese food retail sector Wal-Mart is targeting.

The report added that Alibaba’s essentially using Sun Art to quicken an assault on the $4 trillion brick-and-mortar retail arena, escalating competition with Wal-Mart in the hypermarkets.

“Bringing together the leaders of in-store retail and of online retail will allow us to serve hundreds of millions of Chinese consumers a fully integrated, world-class shopping experience,” said Wilhelm Hubner, chief executive of Auchan Retail, which will slightly raise its stake in Sun Art as part of the deal.

Alibaba eyes grocery sector in India

Early this month, Alibaba has sought formal approval from the CCI (Competition Commission of India) to acquire a stake in Bengaluru-based e-grocer BigBasket.

In July this year, Paytm Mall and Alibaba jointly began due-diligence to pump-in $200 million round in BigBasket. Amazon had also shown interest in e-grocer, however, talks failed owing to differences over valuation.

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