Alibaba logistics unit ends IPO plans in further setback for effort to unlock value

By Emily Bary

Chinese e-commerce company previously planned multiple spinoffs of business units in an attempt to unlock greater value for shareholders

Months after calling off a planned spinoff of its cloud-computing unit, Alibaba Group Holding Ltd. said its logistics unit will forego initial-public-offering plans as well.

Alibaba's (BABA) logistics subsidiary Cainiao has withdrawn its IPO and listing application on the Hong Kong Stock Exchange, the Chinese e-commerce giant said in a Tuesday morning release.

The company plans to give Cainiao's minority shareholders, who include employees, the chance to sell all of their outstanding shares back to the company for up to 62 cents a share. That amounts to a total consideration of up to $3.75 billion. Alibaba already owns about 63.7% of Cainiao's fully diluted equity interest, and shareholders don't have to sell their stakes to the company.

Cainiao's withdrawal of its IPO plans further rolls back an initiative Alibaba laid out roughly a year ago that was meant to unlock shareholder value. The company said last March that it would create six business groups that would have the flexibility to pursue IPOs when they were ready, which was seen as an attempt to unlock value for businesses that might not have been fully appreciated by investors while inside a conglomerate.

Alibaba didn't give a rationale for Cainiao's decision to backtrack on its IPO plans. When Alibaba called off its cloud-computing spinoff late last year, it called out uncertainty brought upon by the "recent expansion of U.S. restrictions on export of advanced computing chips."

The company plans to hold a conference call to share more about Cainiao at 9:30 a.m. Eastern time on Tuesday.

Shares of Alibaba have lost about 8% so far this year as the Chinese economy has reflected sustained pressure and as tensions between the U.S. and China continue.

-Emily Bary

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03-26-24 0729ET

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