22.4 billion Hong Kong dollars! Ali swallowed a 36% stake in RT Mart Auchan’s parent company Gaoxin Retail.

After buying shares in Lianhua Supermarket and Sanjiang Shopping, Alibaba once again bought shares in an offline retail giant: Gaoxin Retail Co., Ltd. (06808.HK), the listed entity of Taiwan-funded supermarket chain brand RT Mart.

On November 20th, Alibaba Group, Auchan Retail S.A and Runtai Group announced a new retail strategic cooperation. According to the strategic cooperation agreement, Ali invested about HK$ 22.4 billion (about US$ 2.88 billion, RMB 19.002 billion) through its wholly-owned subsidiary Taobao China Holdings Co., Ltd., directly and indirectly holding 36.16% of the shares of Gaoxin Retail.

The offer price of this transaction is HK$ 6.50, a discount of 24.42% compared with HK$ 8.60 before the suspension of Gaoxin Retail.

Taobao China Holdings Co., Ltd. is the operating entity of overseas business of Taobao and Tmall International. Runtai is the parent company of RT Mart. This transaction means that the largest supermarket group in China, represented by RT Mart and Auchan, will join the new retail system promoted by Alibaba in terms of business model and capital structure.

After the Hong Kong stock market opened on the same day, the retail share price of Gaoxin opened higher by more than 5%, and then fell by more than 10% all the way down, but the share price rebounded thereafter. As of press time, it has remained flat.

The largest supermarket group in China, represented by RT Mart and Auchan, will fully embrace new retail.

Gao Xin’s chairman intends to resign, and Ali will get a seat on the board.

The equity of Gaoxin Retail is more complicated. Before the transaction, the major shareholders of Gaoxin Retail included: Jixin Holdings (holding 51%), Kofu (holding 7.84% directly), Auchan Retail International (holding 9.71% directly) and CGC (holding 8.46% directly). Among them, Jixin is a special company for the listing of Gaoxin. Auchan holds 51% of the company’s shares and Runtai holds 49%.

After this transaction, the economic benefits of Auchan Retail, Alibaba and Runtai in Gaoxin Retail are about 36.18%, 36.16% and 4.67% respectively. Ali is the second largest shareholder of Gaoxin Retail.

According to the announcement of Gaoxin Retail on the Hong Kong Stock Exchange, after the delivery, Zheng Quantai, Chairman of Gaoxin Retail Board, non-executive director and Runtai senior executive, Gao Xin executive director, Chairman and CEO of RT Mart and Huang Mingduan, Runtai senior executive, intend to resign from the board of directors, which will take effect on the day immediately after the first deadline of the offer. The offeror intends to nominate a new director to join the board of directors, and the effective date will not be earlier than the date of the comprehensive document or a date approved according to the Takeover Code.

According to media reports, Bin Yuan, co-CEO of RT Mart flying cow net, said: Mr. Huang Mingduan, Chairman of RT Mart, will continue to take charge of RT Mart and lead the original senior management team to integrate online and offline advantages.

Analysts said that although Ali is not the largest shareholder, this arrangement may seem that Ali has a good relationship with Auchan and may further control Gaoxin retail in the future. The case that can be referenced is that Ali bought and privatized Yintai Commercial Company after three years of strategic investment and shareholding.

Cooperation Taobao Daojia

In addition to equity transactions, relevant parties also reached an agreement on business cooperation.

Hangzhou Alibaba Zetai Information Technology Co., Ltd., Gaoxin Retail, Auchan China and RT Mart China, wholly-owned subsidiaries of Ali Group, will enter into business cooperation agreements.

According to the agreement, Hangzhou Ali Zetai will provide a number of services as part of its "Taobao Home" service to stores operated by Gaoxin Retail. Specifically, it includes: the shops operated by Auchan China and China, RT Mart approved the use of their business model and online platform; Share data; And the integrated system and POS hardware.

"Taobao Home" aims to operate a business model that allows traditional supermarkets and supermarkets to increase their business efficiency by using Internet technology and Taobao traffic.

I have also contacted Tencent and Suning.

Under the background of sluggish physical retailing, Gaoxin Retail still holds the top spot among overseas chain enterprises in China market. Gaoxin Retail is the largest hypermarket operator in China, operating 446 hypermarkets in 29 provinces, municipalities and autonomous regions in China under the brands of Auchan and RT Mart.

The financial report for the third quarter of 2017 just released by Gao Xin shows that the company’s turnover in the first nine months of 2017 as of September 30 reached 79.030 billion yuan, a year-on-year increase of only 2.2%. Gross profit was 18.689 billion yuan, up 3.5% year-on-year.

In February this year, there were rumors that Gaoxin Retail was in close talks with Alibaba to seek to sell its shares. Yin Yanliang, president of Runtai Group, the major shareholder of Gaoxin, even said that Ali, Tencent and Suning are all "pursuing" RT Mart. However, Ali responded at that time that he did not comment on market rumors.

After the announcement of the transaction on November 20, Huang Mingduan, vice chairman of Runtai Group, said that in recent years, due to the rise of the mobile Internet, the demand of consumers has undergone tremendous changes, and Gao Xin has been trying to move from offline to online. Run Taile sees Gao Xin and Alibaba joining forces and working together online and offline to satisfy customers.

Zhang Yong, CEO of Alibaba Group, said: "Physical stores play an indispensable role in consumer shopping. In the modern digital economy, they should be optimized through personalized product recommendation driven by big data."

Alibaba is opening the new retail model to retail partners to promote online and offline integration and comprehensive improvement of commercial internetization. Alibaba has successively invested in or acquired traditional retail companies such as Yintai, Suning, Sanjiang and Lianhua Supermarket under Bailian, and created new retail formats such as Box Horse Fresh Life, promoted the intelligent upgrade of physical stores with brands, and strategically invested in the digital infrastructure of retail formats. Shiji Company.

In May this year, several supermarkets in Sanjiang Shopping completed digital transformation. In July, the online transaction amount exceeded 25% of the total number of stores, and a large number of new members were obtained, while the turnover of old members also increased by 18%.

Attachment: Progress of New Retail Layout in Ali

In April 2014, Alibaba made a strategic investment in Yintai Commercial with HK$ 5.37 billion.

In August 2015, Ali invested in Suning with a strategy of about 28.3 billion yuan, becoming the second largest shareholder; Suning will subscribe for no more than 27.8 million shares of Ali’s newly issued shares in 140 yuan RMB; The two sides will open up online and offline to comprehensively improve efficiency and provide more perfect commercial services for consumers in China and around the world.

In November 2016, Sanjiang Shopping announced that it had obtained Alibaba’s investment, and Hangzhou Alibaba Zetai Information Technology Co., Ltd., a subsidiary of Alibaba Group, purchased 32% of Sanjiang Shopping, and the two established a joint venture company.

In January, 2017, Alibaba Group, together with Shen Guojun, the founder of Yintai Commercial (Group) Co., Ltd., asked Yintai’s board of directors to submit a proposal to its shareholders on the privatization of Yintai through agreement. The maximum cash required to complete the proposed transaction is about 19.8 billion Hong Kong dollars (about 17.7 billion yuan). According to the privatization agreement, Alibaba will become the controlling shareholder of Yintai after the transaction is completed, and its shareholding ratio is expected to increase to about 74%.

In February 2017, Alibaba Group and Bailian Group announced a strategic cooperation in Shanghai, and said that they would carry out all-round cooperation based on big data and Internet technology in six areas: all-business integration and innovation, new retail technology research and development, efficient supply chain integration, member system interoperability, payment financial interconnection and logistics system coordination.

In May 2017, Alibaba Group signed the Equity Transfer Contract with Yiguo Fresh, and Alibaba Group acquired 18% equity of domestic shares in Lianhua Supermarket from Yiguo Fresh. According to the announcement of Bailian Group, Alibaba received 201,528,000 domestic shares, accounting for 18% of the issued share capital of Lianhua Supermarket, becoming the second largest shareholder. Yiguo Fresh still holds 1.17% of the shares.

On November 20, 2017, Alibaba Group, Auchan Retail S.A (Auchan Retail) and Runtai Group announced a new retail strategic cooperation. According to the strategic agreement, Alibaba Group will invest about 22.4 billion Hong Kong dollars (about 2.88 billion US dollars, 19.002 billion yuan) to directly and indirectly hold 36.16% of the shares of Gaoxin Retail.