Haier Electronics Group Co. (1169) surged to the highest in 14 years in Hong Kong trading after Alibaba Group Holding Ltd. agreed to invest HK$2.82 billion ($364 million) in the home-appliance maker and its logistics business.
Alibaba, which may be headed toward the biggest initial public offering since Facebook Inc., seeks to bolster its delivery services and help create the kind of scale and efficiency that United Parcel Service Inc. and FedEx Corp. have in the U.S. Working with Haier Electronics, which makes washing machines and distributes appliances and furniture, will help Alibaba benefit from rising consumption in China.
“It’s a natural progression of their online to off-line business,” Billy Leung, an analyst at RHB Research Institute Sdn. in Hong Kong, said by phone today. “Most of it is distribution and logistics network. If you look at what’s been happening, Alibaba has been working on its distribution network in China, and it’s an additional service that they’re providing.”
Alibaba will pay HK$541 million for a 9.9 percent stake in Qingdao Haier Logistics Co. and HK$965 million for about 2 percent of white goods maker Haier Electronics, according to a stock-exchange filing. Alibaba will also subscribe to a HK$1.3 billion bond that can be converted into a 24 percent stake in the logistics unit, Haier Electronics said in its statement.
The total investment amount was confirmed by Alibaba spokesman John Spelich in an e-mail.
Alibaba, which says it generates about 70 percent of package deliveries in China, is bolstering its transport services as billionaire Chairman Jack Ma targets a distribution network that can reach virtually any place in the country within a day.
Rising incomes and urbanization are boosting consumer demand in China, where the urban population surpassed 710 million last year from about 200 million in 1980, according to data compiled by Bloomberg.
Haier Electronics is majority owned by Haier Group, China’s largest appliance maker that last year acquired New Zealand’s Fisher & Paykel Appliances Holdings Ltd. to expand overseas. Qingdao Haier Co. (600690), another arm of the Haier Group, remained halted in Shanghai trading.
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