Singapore - Alibaba Group, China’s biggest e-commerce company, agreed to buy a 10 percent stake in Singapore Post to develop its logistics in Southeast Asia ahead of an initial public offering.
Alibaba will spend S$312.5 million ($249 million) acquiring about 220 million new and existing shares and the companies will enter talks for an e-commerce logistics venture, Singapore-based SingPost said in a statement today.
The purchase price of S$1.42 a share is 8.4 percent lower than yesterday’s closing price.
Billionaire Jack Ma is expanding Alibaba’s logistics to build a bigger network for shipping goods sold on its platforms as it heads toward an IPO that may be bigger than Facebook.
Today’s deal will make the Hangzhou, China-based company the second-largest investor in Singapore’s former state-owned mail service after Singapore Telecommunications, SingPost chief executive Wolfgang Baier said today.
“There’s definitely synergies between the two companies,” Andrea Isabel, an analyst at UOB-Kay Hian Holdings in Singapore, said by phone.
“Alibaba doesn’t have their in-house logistics and the partnership will definitely help them. The deal will help SingPost build their presence in China.”
Singapore Telecommunications or SingTel’s stake in SingPost will drop to about 23 percent from 26 percent, Baier said.
In March, Alibaba agreed to invest about $692 million in Intime Retail Group, owner of department stores and supermarkets in China.
In December, the company agreed to spend HK$2.82 billion ($364 million) on home-appliance maker Haier Electronics and its logistics business.
SingPost shares were halted from trading today before announcement.
Sales from e-commerce business accounted for 26 percent of SingPost’s revenue and that figure is expected to increase further, Baier said, declining to provide figures.
The stock will resume trading tomorrow.
They have risen 17 percent this year, compared with the 3.3 percent gain in the Singapore benchmark Straits Times Index.
Alibaba this month filed for an IPO.
The company’s market value is estimated at $168 billion according to analyst estimates, bigger than 95 percent of the Standard & Poor’s 500 Index.
The company is looking to sell about a 12 percent stake, people familiar with the matter have said, which would make the offer around $20 billion based on the estimated value and eclipse the IPOs of Facebook and Visa.
Ma, the founder of Alibaba, has a net worth valued at $12.5 billion, according to the Bloomberg Billionaires Index, making him the third-richest person in China. - Bloomberg News