Alibaba Shares Soar as Investors Welcome Restructuring Plan

By Yifan Wang

Alibaba Group Holding Ltd. shares jumped Wednesday as analysts welcomed the company's move to restructure businesses and allow individual operations to pursue potential initial public listings.

Shares of the Chinese technology giant rose as much as 16%, hitting an intraday high of 98.00 Hong Kong dollars (US$12.48) shortly after the market's opening. The stock was recently 14% higher at HK$96.00. Alibaba's American depositary receipts ended 14% higher at US$98.40.

The rally came after Alibaba late Tuesday said it plans to split itself into six independently run companies that could seek separate IPOs, effectively dismantling a business empire built over two decades by Chinese entrepreneur Jack Ma.

Alibaba's businesses will be split up into six major areas, each with its own chief executive reporting to a board of directors. Alibaba Group is set to become a holding company overseen by Chairman and CEO Daniel Zhang.

The business groups will be allowed to raise external capital and seek IPOs when they are ready, Alibaba said. Its domestic commerce business will remain a wholly owned unit of Alibaba, it said.

Citi analysts welcomed the announcement, saying in a note that they think "it will lead investors to reassess the valuation methodology of Alibaba," suggesting that each business segment could receive a higher valuation from investors upon the restructuring.

Jefferies analysts echoed the positive take. "We think reorganization empowers different business units to respond quickly to market changes and enhance decision making," which could enable more "flexible and leaner management," they said in a note.

"We believe the market will further look into the opportunities and potential of each business unit," Jefferies said.

Write to Yifan Wang at yifan.wang@wsj.com

(END) Dow Jones Newswires

March 28, 2023 23:27 ET (03:27 GMT)

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