Alibaba Ditches Cainiao IPO, Offers to Buy Remaining Shares

Alibaba Group has ditched its plan to list Cainiao and said on Tuesday it will buy the remaining shares (just over a third) of the logistics unit it does not already own for $3.75 billion.

Alibaba chairman Joe Tsai avoided blaming market conditions – the slump in local markets, for the e-commerce giant’s decision to abandon an initial public offering in Hong Kong.

Alibaba holds a 64% stake in Cainiao – “the world’s largest provider of cross-border e-commerce logistics” – and has opted to take a different tack, by offering to acquire the unit’s remaining shares.

ALSO SEE: Fear of US Sanctions Delaying Oil Payments to Russia, Banks Say

“Given the strategic importance of Cainiao to Alibaba and the significant long-term opportunity we see in building out a global logistics network, we believe this is an appropriate time to double down,” Tsai said.

In a recent earnings call, the Alibaba chairman said all of Alibaba’s planned IPOs, including Cainiao’s “were subject to market conditions”.

“Market conditions currently are just not in a state where we believe we can really truly reflect the true intrinsic value of these businesses,” he said at the time.

In a statement on Tuesday, Alibaba said it is offering minority shareholders of Cainiao an opportunity to sell all the outstanding shares for $0.62 per share.

Rocky year

Alibaba has had a tumultuous year since announcing in March 2023 the biggest shake-up in its 25-year history by saying it had decided to split into six units.

It has installed a new CEO, announced and then abandoned listing its Cloud division and refocused on its core businesses.

“The management reorganization resulted in more nimble and efficient decision-making, and we have seen a major positive impact on our business. We are confident that the effects of this reorganization will be reflected in Alibaba’s operating and financial metrics in the future,” Tsai said.

Cainiao first filed the IPO paperwork to the Hong Kong Stock Exchange in September. Tuesday marked the last day of a six-month window before which it was required to update its listing status. No timeline had ever been publicly disclosed.

Alibaba also said it would hold a conference call at 9:30pm Hong Kong time to discuss the Cainiao announcement.