Alibaba Group announced on Monday that it will increase its shares in Hong Kong-listed Sun Art Retail Group to hold a 72-percent stake in the hypermarket chain to further drive online-offline retail convergence.
Following the completion of the stake purchase, Alibaba said it is interested in buying the remainder of Sun Art’s shares for HK$17 billion, according to an exchange filing on Monday.
It will also consolidate Sun Art in its financial statements following the transaction.
Alibaba will pay HK$28 billion (US$3.6 billion) to acquire 70.94 percent equity interest in A-RT Retail Holdings Limited from Auchan Retail International and its subsidiary.
Sun Art operates 481 hypermarkets and three mid-size supermarkets in China as of June and the consolidation gives the e-commerce giant a further foothold in the online retail and grocery delivery sector.
"As the COVID-19 pandemic is accelerating the digitalization of consumer lifestyle and enterprise operations, this commitment to Sun Art serves to strengthen our new retail vision and serve more consumers with a fully integrated experience,” said Daniel Zhang, chairman and chief executive of Alibaba, in the statement.
"The alliance we formed with Auchan Retail and Ruentex is instrumental in building a robust infrastructure to create opportunities and value in China’s retail sector,” he noted.
Sun Art’s physical stores have already been integrated into Alibaba’s on-demand delivery platforms, offering one-hour-and-half-day on-demand delivery of fresh food and grocery following the e-commerce giant's investment in the supermarket chain in 2017.
China's online retail sales in the first eight months surged 9.5 percent to 7.03 trillion yuan and physical goods sales through digital channels hiked 15.8 percent to 5.9 trillion yuan, making up nearly a quarter of the total retail goods sales.
Apart from food items, Chinese consumers are more actively using online channels to shop for non-food merchandise even after the lockdown period.
Sun Art shares surged 28 percent in morning trading on Monday, the biggest jump since July 2011.