Alibaba scraps Hong Kong IPO plan for logistics unit Cainiao as it eyes synergy with e-commerce

Alibaba Group Holding has decided to withdraw the initial public offering (IPO) for its logistics operation Cainiao in Hong Kong, and has offered to buy all remaining shares in the unit, in a major change that seeks to achieve synergy between its delivery arm and core e-commerce operations.

The Hangzhou-based e-commerce giant said in a filing to the Hong Kong stock exchange on Tuesday that it will invest up to US$3.75 billion to buy the remaining shares from minority shareholders of Cainiao Smart Logistics Network Ltd in a departure from an earlier plan to list the unit in Hong Kong. Alibaba currently owns 64 per cent of Cainiao.

After completion of the offer, Alibaba “plans to align part of Cainiao’s business to better realise strategic synergies with Taobao and Tmall Group and Alibaba International Digital Commerce Group, as well as support Cainiao to execute a long-term strategic expansion of its global logistics network,” the company said in the statement on Tuesday.

The decision comes four months after Alibaba walked away from an earlier plan to spin off its cloud unit. In a sweeping restructuring plan unveiled in 2023, Alibaba said at the time it would seek an IPO for Cainiao, and the unit submitted an A1 filing to the Hong Kong stock exchange last September.

In the statement on Tuesday, Alibaba chairman and co-founder Joe Tsai said that Alibaba had decided it was an appropriate time for the company “to double down on its investment in Cainiao”, given the unit’s “strategic importance”.

In a conference call on Tuesday evening, Tsai said it was crucial for the company to achieve deep integration between Cainiao’s operations and its e-commerce businesses to provide “the most competitive consumer experience”.

“Our priority is clear. We want to win in e-commerce by regaining market share and driving growth,” he said.