In a significant strategic shift, Alibaba Group Holding Ltd. has agreed to sell its entire stake in Sun Art Retail Group, China's largest hypermarket operator, to DCP Capital for approximately HK$13.1 billion (US$1.7 billion). This transaction, revealed in a filing to the Hong Kong Stock Exchange on the first day of 2025, represents Alibaba’s continued efforts to reshape its business portfolio by divesting from its physical retail interests.

The deal involves a sales price of HK$1.75 per share, marking a notable departure from Alibaba’s earlier investment trajectory. The tech giant acquired a controlling stake in Sun Art back in 2020 for US$3.6 billion as part of its ambition to merge digital and physical retail. However, recent market conditions and changing consumer behavior have prompted Alibaba to refocus on its core e-commerce operations and cloud computing sectors.

As a result of this divestment, Alibaba expects to incur a loss of about 13 billion yuan (US$1.8 billion) attributable to its shareholders once the transaction closes. This follows the company’s earlier sale of its department store chain Intime in December 2024, suggesting a concerted effort to streamline its operations amidst a cooling retail environment. Alibaba's CEO, Eddie Wu, emphasized that this move allows the company to “monetize its noncore assets” and channel resources into growth areas.

The recent transactions come as Sun Art's shares surged about 85% over the last year, eclipsing the broader Hang Seng Index which saw a modest increase of around 20%. With this sale, Alibaba aims to capitalize on current market valuations while addressing the challenges posed by intensified competition in e-commerce from rivals like Pinduoduo and ByteDance's Douyin.

In conclusion, as Alibaba pivots its focus, the company seeks to integrate the lessons learned from its prior retail ventures into a fortified online strategy aligned with future growth trajectories in e-commerce and cloud solutions. For more details, visit the original report from Reuters.