Alibaba’s rumored acquisition of Kaola, NetEase’s cross-border e-commerce business, took another surprising turn on Wednesday with reports that the two companies are finalizing the transaction this week.
Why it matters: A merger between Alibaba’s Tmall Global and Kaola, the two largest cross-border platforms in China’s e-commerce sector, would form an industry giant of near-insurmountable scale.
- Numerous reports of the various ups and downs in the deal-making process have been circulating widely in the Chinese media, with the last development consisting of news that the deal had reportedly fallen through in late August after the two firms failed to agree on details.
- Alongside the NetEase Kaola acquisition, Alibaba is also investing in the company’s music-streaming business, NetEase Cloud Music.
Details: The acquisition is priced at $2 billion and the transaction will include a mix of cash and shares. The options held by Kaola employees could be converted to Alibaba shares, according to media reports.
- Upon completion of the deal, NetEase Kaola will be integrated into the Tmall Import and Export Business Department, but the Kaola brand will remain separate and will be run independently in the foreseeable future.
- Current NetEase Kaola employees still stay on, promised NetEase CEO Ding Lei in an internal meeting held in August, according to Chinese media reports.
Alibaba declined to comment on “market rumors” when reached by TechNode on Wednesday.
Context: Alibaba’s Tmall Global accounted for 32.3% of China’s cross-border e-commerce market in the first quarter this year, followed by NetEase Kaola with 24.8%, according to data from research institute Analysys.