Alibaba Group Holding Ltd and South Korea's E-Mart are reportedly close to merging their online shopping platforms to better compete in South Korea's dynamic e-commerce sector, according to sources familiar with the matter. The merger could value the new entity at approximately US$4 billion, with an official announcement expected as early as this week.

Negotiations are still ongoing, and the timeline for finalising the deal could extend, the sources said. Representatives for Alibaba and E-Mart have not commented on the matter.

A potential merger would enhance the companies' ability to compete with major South Korean players like Naver Corp and Coupang Inc. This development comes as South Korean consumer confidence sees its steepest decline since the coronavirus outbreak, following political turbulence involving President Yoon Seok-yeol.

Alibaba aims to bolster its international operations amidst slowing growth in its core Chinese e-commerce business. Its domestic operations recorded weak performance in the September quarter, although the company's Hong Kong-listed shares have gained around 11% this year, giving it a market capitalisation exceeding $200 billion.

E-Mart, on the other hand, has been actively growing its e-commerce segment both organically and through acquisitions. The company's shares have declined by about 7% this year, leaving it with a market valuation of US$1.4 billion.

This strategic collaboration is seen as a move to navigate competitive pressures in South Korea's online retail market.

Bloomberg