Alibaba Group Holding Co. Ltd. has agreed to merge its South Korean operations with E-Mart’s e-commerce platform to better compete in the country’s fast-paced online retail sector.
A disclosure by E-Mart to the stock exchange confirmed that Alibaba and G-Market are working to establish the project equally, and the two companies plan to pump more investments into the joint project, which will own 100% of G-Market.
Bloomberg quoted unidentified informed sources as saying that the value of the new entity could be estimated at about $4 billion.
E-Mart shares rose by 5.5% in Seoul, giving the company a market value of $1.4 billion, and Alibaba’s Hong Kong-listed shares rose by about 11% this year, making the company’s value more than $200 billion.
Local competition
The deal will help the two companies take on local rivals including Naver Corp and Coupang this month. Consumer confidence in South Korea fell by the most since the outbreak of Covid-19, due to political unrest sparked by the president’s announcement. Yoon Suk Yeol martial law and impeachment.
Alibaba is seeking to expand its international footprint to compensate for slower growth in its core e-commerce business in China, and the Chinese company’s domestic e-commerce operations reported weak growth in the third quarter of this year, which led to lower financial results that benefited from progress in its cloud services division and business. International, which includes Lazada and AliExpress.
Alibaba, once a dominant player in China’s e-commerce space, has struggled to grow amid competition from rising rivals such as BDD Holdings and ByteDance.
This has forced Alibaba to make a difficult shift under the leadership of co-founder Eddie Wu, who took over as CEO more than a year ago, towards consolidating its core businesses and focusing on investing in the most promising areas of growth.
Alibaba is now consolidating its domestic and international e-commerce operations, under Jiang Fan’s leadership, and has been steadily selling off holdings it no longer considers essential.
Alibaba last week agreed to sell its Intime store business to Youngor Fashion for about $1 billion in a move to divest non-core assets, meaning a loss of 9.3 billion yuan ($1.3 billion) for the Chinese e-commerce company.
