Alibaba invests $692 million in Chinese department store operator

Mon Mar 31, 2014 12:24am EDT
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By Elzio Barreto

HONG KONG (Reuters) - China's Alibaba Group Holding Ltd agreed to invest $692 million in a Chinese department store operator as the e-commerce giant looks to bring the benefits and convenience of online shopping to customers who visit real bricks-and-mortar stores.

Alibaba, whose businesses will come under investor scrutiny ahead of the group's planned mega IPO in the United States this year, said it will buy $214 million worth of shares in Hong Kong-listed Intime Retail (Group) Co Ltd.

It also agreed to acquire $478 million of convertible bonds, which would give Alibaba a 26.1 percent stake in the department store operator once the bonds are converted into shares in three years.

In recent months Alibaba has gone on a shopping spree, spending more than $2.7 billion to expand into media, chat services and mapping technology.

The expansion has encroached on the turf of social networking giant Tencent Holdings Ltd, which has in turn made inroads into Alibaba's territory with its partnership with China's No.2 online retailer

The purchases come as Alibaba starts its preparations for an initial public offering set to be the biggest-ever technology listing, surpassing Facebook Inc's $16 billion listing in 2012.

Intime will issue 220.54 million shares at HK$7.5335 each and HK$3.71 billion worth of convertible bonds to a unit of Alibaba, the department store operator said in a filing to the Hong Kong stock exchange on Monday.

As part of the investment, Alibaba and Intime will form a joint venture to develop online-to-offline, or O2O, business in shopping malls, department stores and supermarkets in China. Alibaba will own about 80 percent of the venture, with Intime controlling the rest.   Continued...

An employee walks past a logo of Alibaba Group at its headquarters on the outskirts of Hangzhou, Zhejiang province, in this May 17, 2010 file photo. REUTERS/Stringer