After pledging $15 billion over five years to grow a global logistics network overseas, Alibaba Group (BABA) - Get Report increased its stake in logistics unit Cainiao to get the ball rolling, Reuters reported.
The Chinese ecommerce giant plans to invest 5.3 billion yuan to increase its stake in Cainiao to a controlling 51% from 47%. Cainiao provides Alibaba's top ecommerce platform, Taobao, with direct logistics support.
Alibaba's investment values the logistics company at about $20 billion and is part of Alibaba's "commitment to building the most-efficient logistic network in China and around the world," CEO Daniel Zhang said in a statement. Alibaba said more shares of Cainiao were issued in this funding round to other investors, but the company did not say how that might affect its valuation of Cainiao.
Alibaba's move to gain control of the company is part of a bid to expand its ecommerce and logistics networks abroad and win a more diversified consumer base. It's a bold play to gain a larger market share in China's domestic warehousing and delivery market, which has grown competitive as ecommerce companies seek more data about online shoppers in the country, Reuters reported.
In June, logistics firm SF Holding severed its relationship with Cainiao, claiming Alibaba requested data from Cainiao that was unrelated to its professional partnership deal terms. Alibaba denied the allegations.
Beyond the Cainiao stake, Alibaba said its $15 billion, five-year investment in global logistics will be used to conduct data technology research and improve warehousing and delivery operations.
Alibaba stock traded up 1.1% premarket Tuesday to $171.38.
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