Alibaba Group announced on March 26 that in order to better strengthen e-commerce business collaboration with Alibaba and continue to support Cainiao's expansion of its global logistics network, it has decided to withdraw Cainiao's listing application and offer to acquire shares already owned by Cainiao's minority shareholders and employees. The acquisition involved an amount of $3.75 billion.
This strategy highlights Ali's focus on strengthening its e-commerce core business and logistics collaboration, as well as its confidence in investing in future logistics strategies. Cainiao is an integral part of Alibaba's core business and an important infrastructure for e-commerce development.
Cai Chongxin, chairman of the board of directors of Alibaba Group, said, “Considering Cainiao's strategic importance to Alibaba and the significant long-term opportunities we have seen in building a global logistics network, we think now is the right time for Alibaba to increase its investment in Cainiao.”
Ali initially announced a comprehensive asset restructuring plan in May 2023, including Cainiao's IPO. At the time, Ali believed that a separate listing would better reflect the value of Cainiao as an important business for Ali. However, the situation has changed so far. Based on comprehensive considerations, the current IPO cannot highlight the intrinsic value of Cainiao — a leading global e-commerce logistics company.
Alibaba Group holds about 63.7% of Cainiao's fully diluted share interests (including shares already vested under Cainiao's employee shareholding plan). This time, it will provide up to US$3.75 billion in cash to bid for all shares of Cainiao's minority shareholders and the shares already owned by employees. The strength of the acquisition also shows that Ali is optimistic about Cainiao's confidence and determination to continue investing. Cainiao minority shareholders and employees can choose to sell or continue to hold Cainiao shares.
The Cainiao employee share acquisition plan will be implemented in August 2024. Employees can voluntarily sell all Cainiao shares they have owned on or before August 1, 2024. The acquisition is also a reward for employees' long-term contributions and helps to further boost the team's confidence.
This strategic adjustment to Cainiao is in line with Ali's strategic priorities. Since Alibaba's new management team took office in September last year, it has rapidly strengthened its core business focus and carried out comprehensive organizational governance upgrades.
Cai Chongxin emphasized, “Organizational changes have made decision-making more flexible and effective, and have had a significant positive impact on our business. We believe the effectiveness of organizational change will be reflected in Alibaba's future operational and financial metrics. We have made significant progress in capital management, including withdrawing from non-core asset investments and increasing shareholder value through dividends and share buybacks. In the future, we will continue to improve capital efficiency and shareholder returns.”
According to public information, Cainiao was founded in 2013 and has built a world-leading smart logistics network in ten years, becoming a global leader in e-commerce logistics. In Ali's latest quarterly earnings report, Cainiao's quarterly revenue increased by 24% year-on-year and maintained strong growth. According to the data, Cainiao is currently one of the largest cross-border e-commerce logistics companies in the world, handling more than 1.5 billion cross-border e-commerce packages per year.