NEW YORK (The Deal) -- Chinese e-commerce giant Alibaba Group Holding on Monday agreed to buy up to 25% of listed Chinese department store operator Intime Retail (Group) Company as the line between online and brick-and-mortar shopping blurs.
Alibaba said it would pay HK$1.66 billion ($214 million) for a 9.9% stake in new shares and subscribe to $478 million worth of convertible bonds which, when converted, would give Alibaba a quarter of Intime.
"Although online retail sales still represent less than 10% of all retail spending in China, e-shopping is booming and Alibaba officials have said they expect as a consequence there will be deeper integration between brick-and-mortar stores and the Internet," Alibaba wrote in its corporate blog.
Linking online and real-world presences isn't necessarily new but an established e-commerce group linking up with a department stores operator seems novel.
Alibaba CEO and founder Jack Ma has said he wants to be able to deliver any product anywhere in China within 24 hours. Gaining access to Intime's 36 stores will help him meet this goal.
The department stores will also gain access to Alibaba's broad inventory, improving their buying power.
Alibaba would pay HK$7.5335 per Intime share, a 13.7% discount to the stock's Wednesday close, the last day the shares were traded. Intime shares had been suspended in anticipation of the announcement. After resuming Monday, the stock fell 7.5%, or HK$0.68, to HK$8.35, as investors absorbed the diluting effect of the deal.