Alibaba invests $700M in Chinese department store
China's Alibaba Group will invest approximately $700 million in Chinese department store chain Intime as the online retailer looks to add a brick and mortar presence.
The deal is roughly the equivalent of Amazon (NASDAQ: AMZN) buying Macy's (NYSE: M), noted the New York Times.
Alibaba, China's leading e-commerce company, will pay approximately $214 million for a 9.9 percent equity stake in Hong Kong-listed Intime and subscribe to $478 million worth of convertible bonds issued by Intime. If the bonds are converted into stock, Alibaba's stake in Intime could rise to at least 25 percent.
Intime operates 36 department stores in mainland China, and Alibaba is banking that adding offline retail to its online operations will bolster the company's overall retail presence.
"We see significant opportunities to extend our e-commerce platform to physical retail," said Daniel Zhang, Chief Operating Officer of Alibaba Group, in a press release announcing the Intime deal.
Alibaba said through the investment it expects to get more access to Intime's database and network, which could improve the consumer shopping experience through greater integration with Tmall.com, China's largest consumer website. For example, Intime shoppers will be able to participate in online promotions and enjoy membership benefits at Intime stores by using their smartphones at the stores.
The move comes as Alibaba prepares for its initial public offering, an event that could top Facebook's as the largest technology company listing valued at $16 billion.
Alibaba is one of the world's biggest internet companies with more than $150 billion worth of merchandise bought and sold through its online platforms each year. Alibaba operates Taobao.com, China's largest consumer-to-consumer e-commerce site similar to eBay (NASDAQ: EBAY), and Tmall.com, a business-to-consumer site similar to Amazon with more than 70,000 international and Chinese brands available from more than 50,000 merchants. The company also operates a business-to-business sales platform and an online payment platform like PayPal.
-See this Alibaba announcement
-See this New York Times story
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