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Nisha Gopalan

Alibaba Takes the Easy Way Out of Easyhome

The e-commerce giant is lowering its stake in the home-improvement chain. A wise move given the sector’s outlook.

Getting its house in order.

Getting its house in order.

Photographer: Patrick T. Fallon/Bloomberg

Alibaba Group Holding Ltd. is reducing its stake in a partly owned Chinese furniture retailer. This couldn’t have come at a better time.

On Thursday, Shenzhen-listed department-store operator Wuhan Zhongshang Commercial Group Co. said it’s issuing shares to Beijing Easyhome Furnishing Chain Store Group Co. The $5.6 billion transaction is an effective backdoor listing for the country’s second-largest home-improvement chain. It also reduces Alibaba’s stake to at least 5 percent just 11 months after the company bought up 15 percent of Easyhome, in the e-commerce giant’s push toward bricks-and-mortar businesses.