Alibaba and delivery company STO Express signed an agreement on a stake purchase option on Wednesday. The deal will give the Hangzhou-based tech giant a controlling stake in the Shenzhen-listed logistics company.
Why it matters: Logistics capabilities are considered a key asset for e-commerce companies, and they often work together in the sector to expand delivery networks.
Details: Alibaba is granted an option to acquire a 31.4% stake in STO Express within three years of Dec. 28, according to STO Express’ statement (in Chinese) filed with the Shenzhen Stock Exchange. The deal would cost just shy of RMB 10 billion (USD1.4 billion).
- The offer will give Alibaba a 46% controlling stake in the company.
- In March, Alibaba gained its current 14.65% stake in STO Express. The deal, worth RMB 4.7 billion, was an attempt to reduce logistics costs, an Alibaba spokeswoman told TechNode previously.
Context: Chinese internet giants are pushing their way into the country’s massive courier market. Alibaba’s logistics division Cainiao is working with STO Express and other delivery companies to take on JD Logistics.
- Compared with Alibaba, JD.com sells products directly to its customers and ships from its huge warehouses via its own logistics network.
- Alibaba already holds minority stakes in three of the country’s top logistics companies—ZTO Express, YTO Express, and Best.
- Couriers including YTO Express, STO Express, ZTO Express, and SF Express also hold stakes in Cainiao, which was co-founded with Alibaba and more than a dozen other Chinese firms in 2013.