Alibaba to Spend $3.6 Billion to Boost Stake in Grocer Sun Art

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Alibaba Group Holding Ltd. will invest about $3.6 billion to increase its stake in Chinese grocery retailer Sun Art Retail Group Ltd., expanding its efforts in the sector as it pushes beyond traditional e-commerce.

Alibaba will raise its aggregate direct and indirect stake to about 72% by acquiring equity from Auchan Retail International S.A., the company said in a statement. Alibaba said it would spendabout $2.9 billion for a 36% stake in Sun Art in 2017.

Alibaba Chief Executive Officer Daniel Zhang has made the expansion into the grocery business a cornerstone of his growth strategy, an effort that has paid off during the coronavirus pandemic. Sun Art has hundreds of hypermarkets across China operating under the Auchan and RT-Mart brand names, which can be used to supplement Alibaba’s own efforts.

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As Alibaba increases its stake to a majority, Sun Art’s financial statements will be consolidated into the larger company’s. Peter Huang, Sun Art’s CEO, will add the title of chairman for the business.

Zhang has been directly involved in the expansion into what the company calls its “new retail” strategy, combining e-commerce with physical stores. He helped launcha startup called Freshippo within Alibaba that aimed to combine a grocery store, a restaurant and a delivery app.

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