Alibaba Gets Majority Stake In Sun Art Retail With $3.6B Funding, As It Eyes Offline Expansion

Alibaba Group Holdings Limited BABA disclosed an additional $3.6 billion investment in Chinese supermarket operator Sun Art Retail Group SURRF on Sunday. The Chinese e-commerce giant will now hold a controlling interest with a 72% stake, including both direct and indirect holdings.

What Happened: Alibaba will acquire 70.94% equity in A-RT Retail Holdings Ltd from the parent company Auchan Retail International SA and its subsidiaries, and make a buyout offer for the balance stake to shareholders.  

Sun Arts hypermarkets are already integrated with Alibaba’s one-hour delivery project, Taoxianda, and Tmall portals.

Why Does It Matter: Alibaba CEO Daniel Zhang said the "strategic investment in Sun Art in 2017 was an important step in our New Retail strategy."

According to HSBC, China’s grocery market could witness a 2.5 times growth rate by 2022, with a potential $103 billion market size, Bloomberg noted.

As of June-end, Sun Art controlled 481 hypermarkets and three mid-size supermarkets across China under the brands RT-Mart and Auchan.

Price Action: Alibaba stock closed 2.62% higher on Friday at $307.31 per share.