Alibaba to Acquire NetEase's Imports Retailer for $2 Billion

Kaola, previously in talks to merge with Amazon's China business, will reportedly become fully-owned by Alibaba by the end of this week.

Belinda Zhou
    Sep 04, 2019 2:30 PM  PT
Alibaba to Acquire NetEase's Imports Retailer for $2 Billion
author: Belinda Zhou   

Alibaba Group Holding Ltd. (NYSE: BABA) will reportedly close the acquisition of e-commerce firm Kaola for $2 billion by the end of this week.

Kaola, owned by Chinese gaming giant NetEase Inc. (Nasdaq: NTES), has been a leader among imported goods sellers, followed by Tmall Global operated by Alibaba and JD Worldwide by Inc. (Nasdaq: JD), as reported by iMedia.

Core people close to the transaction said the talks for the acquisition of Kaola were at the last stage and will be completed within this week, Chinese tech blog 36Kr wrote. The deal is worth $2 billion, to be paid in stocks and cash, according to the resource. The options held by stakeholders in Kaola will be transferred to Alibaba, 36Kr said.

Upon the closing of the deal, Kaola will be operated by Tmall Import and Export Division without changes to the brand. The management team in Kaola will be replaced by Tmall's team led by Yiman Liu, the reports said. 

Alibaba and NetEase have not officially confirmed the transaction. 

Previously, Amazon's joint venture in China has been in talks to merge with Kaola, which sought to run independently from NetEase, according to reports by Chinese news site Caixing and Reuters.

NetEase's e-commerce arm, which includes Kaola and Yanxuan, reported revenue of $764 million in the second quarter, representing 20 percent increase from the corresponding period in 2018.

"We further optimized our internal structure, enhanced our warehouse and logistics operations and upgraded our supply chain management," Charles Yang, the chief financial officer of NetEase, said in a call with analysts last month.

"For Kaola, our self-built bonded warehouse in Ningbo, began trial operation in June. This warehouse is capable of handling millions of orders every year, which we believe will help us to improve operating efficiencies even further," he added. 

Shares in NetEase closed at $268.38 apiece, up 4 percent Wednesday. Alibaba's stock jumped 1 percent to $174.33 per American depositary share.