Alibaba to Establish a JV With Russian Giants
Alibaba Group Holding Ltd. (NYSE: BABA) will launch a joint venture with three Russian companies, each investing $100 million in the project, as reported by various media Wednesday.
According to the agreement with Russian Direct Investment Fund (RDIF), mobile operator Megafon, and internet group Mail.ru, Alibaba will own 48 percent of the new venture, AliExpress Russia. The deal was finalized during Russia’s Eastern Economic Forum on Tuesday, according to reports.
RDIF, Megafon, and Mail.ru will hold a cumulative 52 percent in the e-commerce platform after contributing cash, shares, and other assets. Megafon will own a 24 percent stake in AliExpress Russia and Mail.ru will contribute its Pandao business and cash in exchange for a 15 percent stake in AliExpress Russia. Russian Direct Investment Fund will acquire a 13 percent stake in AliExpress.
With this deal, Alibaba is increasing its share in the Russian market.
China's giant said in a statement, “By partnering with Russia’s leading consumer internet platform, AliExpress Russia will leverage Mail.ru Group’s 100 million internet users across its social media, messaging, e-mail and online games properties.”
Alibaba also said, “With access to this unique platform and user base, the JV will fill a highly complementary role in the Russian consumer lifestyle value chain, creating a one-stop platform for social, communications, gaming and shopping."
The stock of Alibaba in New York closed at $151.65 per American depositary share, down nearly 2 percent on the day.