JD Strikes $432 Million Deal to Acquire Controlling Interest in Kuayue Express

Investors will want to keep a close on JD, as analysts expect it to report revenues of roughly $27.39 billion on earnings of 38 cents a share Monday.
Anthony RussoAug 14,2020,20:25

JD.com Inc. (Nasdaq: JD; HKEX: 09618) will acquire a controlling interest in the express transport company Kuayue Express Group Co. Ltd. for 3 billion yuan ($432 million) to bolster its logistics arm.

Under the deal, the online retail giant’s subsidiary, Jingdong Express Group, known in short as JD Logistics, will receive a controlling stake through a combination of buying existing shares and subscribing to newly issued shares of Kuayue Express.

The news follows JD’s move to invest $100 million in supply chain manager Li & Fung, which gave the retail giant a minority stake.

“Kuayue Express is a reliable delivery services provider and industry leader in express courier services with innovative technology and advanced operations,” Zhenhui Wang, the chief executive officer of JD Logistics, said in a statement today.

He added, “Collaborating with Kuayue Express advances our integrated supply chain management, technology initiatives and service expansion to third party merchants. We will leverage our respective advantages and the synergy the collaboration creates to enhance the client experience and increase overall supply chain efficiency for JD and society at large.”

By midday Friday, the stock in JD was trading 2% lower, at $61.23 per American depositary share, in New York. At the close of trading in Hong Kong, its stock slipped 0.57% to HK$243. JD has performed relatively well in Hong Kong since making its debut in June, raising $3.9 billion. Shares of JD are up nearly 8% from its IPO pricing of HK$226 each.

The secondary listing of JD followed its rival Alibaba Group Holding Ltd.'s (NYSE: BABA; HKEX: 09988) footsteps, which raised $13 billion in November 2019.

Investors will want to keep a close eye on JD until Monday when it reports its second-quarter financials. According to Benzinga, analysts expect JD to report revenues of roughly $27.39 billion on earnings of 38 cents a share, representing increases of 25% and 15% year-over-year, respectively.

JD expects its deal with Kuayue Express to close in the third quarter. As of March, JD Logistics operated more than 730 warehouses.