Alibaba Group has withdrawn the application to take the company (Cainiao Smart Logistics Network) public in Hong Kong in its latest different strategy.
The move by Alibaba of this order would represent the purchase of the remaining 36% equity that is valued at $3.75 billion, strengthening its global logistics system.
Recently, Alibaba, which already owns 64 percent stake of Cainiao, shared it’s plans to buy out remaining 36% of Cainiao it does not already own for up to $3.75 billion in early June or mid-July.
Mr. Joe Tsai, the chairman, reinforced the strategic role of Cainiao in its plan to grow Alibaba further and to enhance a global logistics infrastructure which will support Alibaba’s vision.
Impacts of the cancellation
The cancellation of the Cainiao IPO is regarded as yet another disappointment with regard to Alibaba’s comprehensive overhauling scheme designed for the six business divisions to be collectively listed separately. Nevertheless, these depots don’t hold a public share offer yet. Regarding the first three, their developers have to make some important corrections.
The chief purpose for the withdrawal of the IPO by Alibaba is the group’s evaluation of the grim environment faced by the business and its ability to concentrate on integration of Cainiao with the e-commerce traits.
Alibaba is issuing this statement amid a cut throat competition in the Chinese online shopping sector from names such as JD, Pinduoduo and Douyin vying for dominance.
In September, Cainiao first registered IPO documents with the Hong Kong Stock Exchange planning to raise a minimum of $1 billion, which made it one of the most anticipated IPOs of the year.
The cancellation of the IPO also affects Cainiao employees who have company stock options, Alibaba consoling employees by buying back vested equity interests.
Alibaba’s shares have been volatile, especially after the freezing of Ant Group’s IPO which resulted in a substantial decrease in market value.
Alibaba’s decision demonstrates the strategic importance of keeping the main assets and developing a company’s position in the e-commerce market, where there are many competitors.
This follows a broader trend of tech companies reassessing IPO possibilities given the market uncertainty and regulatory challenges.
With the solid commitment to Cainiao, Alibaba expresses the importance of logistics infrastructure for its e-commerce business and its development into an international company.
Basically, Alibaba’s choice to withdraw the Cainiao IPO and pursue full ownership, obviously manifests its strong belief in the long-term growth of its logistics business and its strategic plan for the future.
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