On December 31, Alibaba Group announced that it would sell its stake in Sun Art Retail Group, China’s largest hypermarket operator. The Alibaba Group and DCP, a Chinese private equity firm finalized a deal involving sales of Sun Art’s stakes in Alibaba. The deal was filed on the Hong Kong Stock Exchange on January 1, setting its price at $0.22 per share. This is one of the major steps towards Alibaba’s strategic planning to refocus its core e-commerce business while selling its non-essential business.
Alibaba is expected to project a loss of $1.8 billion to its shareholders after the sale proceeds. Notably, the company owns the South China Morning Post. This comes as the second major divestment of the company in a month. In December 2024, Alibaba sold its entire stake in Intime Retail Group to Chinese apparel company Youngor Fashion and Intime’s management team members, recording a loss of $1.8 billion.
Alibaba Sells Stake in Sun Art
Since late September, investors have been anticipating Alibaba’s divestment of Sun Art’s Retail Group. In 2017, Alibaba first invested in the Sun Art retail stocks, after which it started expanding its control on the supermarket chain. Alibaba also took control of Sun Art from its French owner, the Mulliez family as the company was planning to create a new retail model that promotes both online and offline shopping platforms.
Alibaba’s dream of building a retail empire that blends online and physical stores faced setbacks due to challenges like the coronavirus pandemic and an economic slowdown, which led to weaker consumer spending. This is one of the major reasons that prompted Alibaba to sweep off its sprawling business empire. In November 2024, Alibaba announced that it would merge its domestic and overseas e-commerce operations into one unit under CEO Jiang Fan.
Sun Art’s Stake
The 78.7% stake, owned by Alibaba subsidiaries, played a key role in the company’s move into physical retail. Bought for $3.6 billion in 2020, it was meant to strengthen Sun Art’s hypermarkets using Alibaba’s digital and logistics strengths. However, growing competition and changing market conditions have led the company to rethink its strategy.
Inside the Sun Art Retail Group
Sun Art runs a chain of hypermarkets in China, providing a Costco-style shopping experience. While its share price on the Hong Kong Stock Exchange has jumped an impressive 85% in the past year, far surpassing the Hang Seng Index’s 20% rise, the asset no longer fits Alibaba’s strategic direction. This move is part of Alibaba’s ongoing efforts to simplify its operations under CEO Eddie Wu, who has prioritized investments in cloud services, online marketplaces, and global growth.
