BEIJING • Alibaba Group Holding is leading a bid to take department store chain Intime Retail Group private for as much as US$2.6 billion (S$3.7 billion), as China's largest online retailer deepens its integration with brick-and-mortar stores.
The deal strengthens Alibaba's burgeoning foothold in physical retail as it seeks growth beyond a slowing online business.
Control of Intime will also allow the e-commerce giant to explore ways to modernise a US$4.5 trillion industry that has not adapted well to online shopping.
Alibaba and Intime's founder Shen Guojun will pay HK$10 apiece for the Intime shares they do not already own, says a statement to the Hong Kong stock exchange.
The offer represents a 42 per cent premium over the last closing price, and the maximum amount of cash required, including options, is about HK$19.8 billion (S$3.6 billion). Intime's stock surged 35 per cent on resuming trade yesterday.
Shenzhen analyst Ray Zhao said: "Intime's valuation is relatively low now, so it would be a good time (for Alibaba) to buy."
Alibaba first took a stake in the retailer in 2014, and its CEO Daniel Zhang became Intime's chairman the next year.
The partnership already gives Alibaba access to Intime's inventory and allows its online customers to pick up orders from physical stores.
Privatisation will allow Intime to work more closely on integrating online and offline shopping with a separate group of shareholders.
Intime's shares, which were halted since Dec 28 pending an announcement, had fallen 8 per cent in 2016, compared with the 0.4 per cent drop in the city's benchmark Hang Seng Index. Alibaba gained 8.1 per cent last year in New York.
Alibaba has announced 35 deals over the past 12 months with a total value of US$15.2 billion, according to data compiled by Bloomberg. It has bought or invested in a number of physical retail chains, including Haier Electronics, as it tries to revamp the country's US$4.5 trillion traditional retail industry.
Founder and billionaire Jack Ma's goal is to replace distributors and middlemen and let stores buy directly from suppliers based on real- time demand and inventory. The deals flesh out its own online shopping offerings, open sales channels and expand its logistics network.
While the number of Chinese online is astounding, consumers still prefer buying big-ticket items like refrigerators offline. For purchases like that, a physical store, done right with all the customer experience bells and whistles, matters.
Meanwhile, Mr Ma met US President-elect Donald Trump on Monday to discuss how his company could help create one million jobs by adding small and medium-sized US businesses to its platforms, estimating that each one will hire a new person as a result of the added commerce.