Suning Easy Buy Group Co., Ltd. (Suning Easy Buy) announced on September 23 that its major shareholder Alibaba Group Holding Limited (Alibaba) will reduce its stake by up to 263 million shares. This is the first time Alibaba has reduced its stake in Suning Easy Buy after investing in the company for 10 years.
In the disclosure announcement titled “Pre-disclosure Announcement of Shareholders Reducing Shares by Over 5%,” released on September 23, Suning Easy Buy stated that its shareholder holding over 5%, Hangzhou Haoyue Enterprise Management Co., Ltd., plans to reduce some of the company’s shares. Within three months after 15 trading days from the date of the pre-disclosure of the reduction, a total of no more than 263 million shares will be reduced through centralized bidding or block trading, accounting for approximately 2.85% of the total share capital, excluding repurchased shares.
Currently, Hangzhou Haoyue is the second largest shareholder of Suning Easy Buy, holding 1.861 billion shares, representing a 20.09% stake. On September 23, the closing price of Suning Easy Buy was 1.78 yuan per share. Based on the latest stock price and the maximum reduction amount, Hangzhou Haoyue is expected to earn about 490 million yuan from this reduction. However, compared to its initial investment cost, the value of its Suning Easy Buy shares has significantly decreased.
The shareholders of Hangzhou Haoyue include Taobao (China) Software Co., Ltd., Zhejiang Tmall Technology Co., Ltd., and ALIBABA.COM CHINA LIMITED, all subsidiaries of Alibaba.
Following the reduction announcement, on September 23, Suning Easy Buy’s stock price hit the limit down at the opening, ultimately closing at 1.78 yuan, narrowing the decline to 4.8%, with a latest market value of 16.5 billion yuan.
As early as August 2015, Alibaba Group invested approximately 28.3 billion yuan in Suning Easy Buy (then Suning Cloud Business) through a private placement, acquiring 19.99% of the post-issuance total share capital at a price of 15.23 yuan per share, becoming its second largest shareholder. At the same time, Suning Easy Buy subscribed to Alibaba’s newly issued shares for 14 billion yuan, representing approximately 1.09% of its post-issuance total share capital.
However, the returns from this collaboration have been starkly different. Suning reduced its Alibaba holdings three times between 2017 and 2018, cashing out over 20 billion yuan. On the other hand, Alibaba had never reduced its Suning shares in the ten years since its investment. Based on the latest closing price of Suning Easy Buy at 1.78 yuan per share, Alibaba faces an estimated unrealized loss of about 25 billion yuan on its holdings.
Chinese media “International Finance News” pointed out on September 23 that after this reduction, Hangzhou Haoyue’s stake will decrease to 17.24%, placing Suning Easy Buy’s shareholding percentage below founder Zhang Jindong and his concerted action person’s 20.45%. This move could reflect Alibaba’s firm decision this time.
Suning Easy Buy Group Co., Ltd. was founded on December 26, 1990, headquartered in Nanjing, and is a leader in Chinese commercial enterprises, operating a wide range of products including traditional home appliances, consumer electronics, department stores, daily necessities, books, virtual products, and more.