China’s largest online giant, Alibaba Group Holding Ltd (Alibaba) is making moves to equally become a giant offline. As part of its efforts to do so, it announced that it will acquire a stake in Sun Art Retail Group, owners of hypermarkets Auchan and RT-Mart.
Sun Art is market leader in the offline grocery market with an 8.2% market share according to Kantar Worldpanel.
The deal will actually be carried out by Alibaba’s subsidiary, Taobao China Holding. Taobao will form an alliance with Auchan Retail S.A. and Reuntex Group. It will invest HK$ 22.4 billion (~$22.9 billion) in return for a 36.16% stake (from Reuntex) in the business. The acquisition will see Taobao become the second largest shareholder in Sun Art after Auchan (36.18%) while Reuntex will have a 4.67% stake.
Alibaba will use the acquisition as a chance to tap into China’s $500 billion food retail market and increase its foothold in the offline market. In recent years, it has started to invest in physical stores. So far, it has spent up to $9.3 billion since 2015.
CEO of Alibaba, Daniel Zhang said in a statement that “Physical stores serve an indispensable role during the consumer journey, and should be enhanced through data-driven technology and personalized services in the digital economy.”