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China's Alibaba In US$1 Bln Deal With Lazada To Boost Presence In Southeast Asia

by April 13, 2016 General

By Samantha Tan Chiew Ting

BEIJING, April 13 (Bernama) — China’s Alibaba Group Holding Ltd has acquired a controlling stake in Lazada, a leading e-commerce platform in Southeast Asia.

The transaction consists of an investment of about US$500 million in newly issued equity capital of Lazada and acquisition of shares from certain shareholders, for a total investment of about US$1 billion.

The transaction is expected to help brands and distributors around the world that already do business on Alibaba’s platform, as well as local merchants, to access the Southeast Asian consumer market, it said in a statement here Wednesday.

Lazada currently operates e-commerce platforms in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. These six countries combined have a population of about 560 million and an estimated Internet user base of 200 million.

Alibaba said with only three per cent of the region’s total retail sales conducted online, Southeast Asia is expected to offer tremendous growth potential to both companies as Internet penetration continues to rise.

Alibaba President Michael Evans said the investment in Lazada gives the group access to a platform with a large and growing consumer base outside China.

“This investment was consistent with our strategy of connecting brands, distributors and consumers wherever they are and support our ecosystem expansion in Southeast Asia to better serve our customers,” he said.

Lazada Group SA Chief Executive Officer Max Bittner said the transaction will help Lazada accelerate its goal to provide the 560 million consumers in the region access to the broadest and most unique assortment of products.

“Furthermore, leveraging Alibaba’s unique knowhow and technology will allow us to rapidly improve our services and provide an even more effortless shopping and selling experience,” he said.

The transaction involved Alibaba entering into a put-call arrangement with certain Lazada shareholders, giving Alibaba the right to purchase, and the shareholders the right to sell collectively, their remaining stakes in Lazada at fair market value during the 12 to 18 month period after the closing of the transaction.

Founded in 2012, Lazada is a one-stop e-commerce gateway for local and international brands and distributors to consumers in six distinct Southeast Asian markets namely Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Credit Suisse (Hong Kong) Ltd acted as exclusive financial advisor to Alibaba and Goldman Sachs (Asia) LLC as exclusive financial advisor to Lazada.