Going South

12 April 2016 By Robyn Mak Follow @mak_robyn

The Chinese e-commerce giant is taking control of upstart Lazada in its largest overseas deal to date. Countries like Indonesia and Malaysia offer new growth. But widening losses and fierce competition mean expansion is not cheap. It also dilutes Alibaba’s asset-light model.

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Chinese e-commerce group Alibaba said on April 12 it will buy a controlling stake in online retailer Lazada for $1 billion.

Alibaba will spend $500 million buying shares from existing shareholders, the company said, and will invest a further $500 million in newly issued Lazada shares. Alibaba has also entered into agreements with Lazada shareholders giving it the right to buy the remaining stakes - and the investors the right to sell - at fair value in 12 to 18 months’ time.

In a separate statement, German-listed Rocket Internet said it will sell a 9.1 percent stake in Lazada to Alibaba for $137 million. Other shareholders Kinnevik and Tesco also said they were selling their Lazada stakes to Alibaba.

Lazada currently operates e-commerce platforms in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Credit Suisse acted as the exclusive financial advisor to Alibaba, while Goldman Sachs advised Lazada.

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