Source:
https://scmp.com/business/companies/article/2189442/alibaba-buy-stake-parcel-delivery-firm-sto-express-46-billion
Business/ Companies

Alibaba to buy stake in parcel delivery firm STO Express for 4.6 billion yuan

  • Alibaba will pay US$693.3 million for a 49 per cent stake in a new unit that will control 29.9 per cent of STO
  • STO shares jump by 10 per cent daily limit in Shenzhen
Workers at STO Express sort out packages in Wenzhou in east China's Zhejiang Province. Photo: Xinhua

Alibaba Group Holding plans to buy a stake in Chinese courier service firm STO Express, as the e-commerce juggernaut makes a further step forward to expand its smart logistics networks.

Alibaba will pay 4.66 billion yuan (US$693.3 million) for a 49 per cent stake in a new unit that will control 29.9 per cent of Shenzhen-listed STO, the courier service firm said in an exchange statement, without saying how much Alibaba will directly control the listed company. The stock jumped by the 10 per cent daily limit to 22.48 yuan right after the open on Monday.

“STO will further explore co-operations in areas of logistic technology, parcel delivery end and new retail logistics after the deal is closed,” the courier firm said in the statement.

Alibaba signed a framework agreement over the weekend with Deyin Investment, STO’s biggest shareholder, which will devolve a combined 46 per cent stake in the company to two new units that will be soon created, according to the statement. Currently, Deyin controls about 54 per cent of the listed company.

STO, which is based in Shanghai, is the smallest among China’s five major courier service firms in terms of market cap. It is capitalised at 31.3 billion yuan, compared with 153.1 billion yuan for SF Holding and 106.5 billion yuan for US-listed ZTO Express Cayman. Its shares have gained 37 per cent this year, beating a 21 per cent gain on the benchmark Shanghai Composite Index. Full-year profit for STO rose 37 per cent from a year earlier to 2.05 billion yuan in 2018.

Alibaba’s increased investment in the courier service industry comes amid rising demand for delivering parcels in China. A record of more than 50 billion parcels were delivered in 2018. The e-commerce firm have earlier invested in YTO Express Group, ZTO, BEST and Suning Logistics.

New York-traded Alibaba is the parent company of the South China Morning Post.