Here's How Alibaba And China Are Set To Gain From Unigroup Takeover

  • An Alibaba Group Holding Ltd BABA led consortium emerged as the frontrunner to take over Tsinghua Unigroup Co, fetching over 50 billion yuan ($7.8 billion) to help keep China's indebted chip champion afloat, Bloomberg reports.
  • A successful deal could help Alibaba secure valuable chip know-how and a supply of semiconductors to fuel the country's largest cloud computing platform. 
  • The Chinese central government is leaning towards the Alibaba-led offer, given the e-commerce giant's financial heft and the potential synergies with its cloud and semiconductor business.
  • The deal will likely include conditions for restructuring Unigroup's roughly 100 billion yuan-plus of onshore and offshore debt.
  • A deal could help Alibaba gain Beijing's favor which penalized the e-commerce giant for monopolistic behavior. The government also strives to reduce its reliance on the U.S. for chips that power everything from phones to cars.
  • Price Action: BABA shares traded higher by 0.21% at $168.76 in the premarket session on the last check Wednesday.
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