E-commerce giant Alibaba Group (NYSE: BABA) is forming a partnership with Swiss-based travel retailer Dufry (OTC: DUFRY) aimed at capturing the Chinese travel retail market.
The new joint venture will be 51% owned by Alibaba and 49% owned by Dufry.
Shares of Alibaba dropped 0.5% on Monday, while Dufry’s stock price jumped 22%.
Specific details about the alliance were not disclosed, but a statement says that the companies will “explore and invest in opportunities in China to develop the travel retail business.”
The joint venture combines Dufry’s existing travel retail infrastructure and operational assets with Alibaba’s digital capabilities. This deal could accelerate Dufry’s digital transformation by modernizing its online and in-store offerings with more technology and data analytics.
Dufry CEO Julián Díaz says that this collaboration “will drive growth in Asia and with Chinese customers worldwide with the support of new digital technologies.”
“By fostering existing and new business models in offline and online travel retail, we are convinced the joint venture will capitalize on growth opportunities and will support Dufry to become the leading digital travel retail company worldwide,” says Diaz.
Asia Pacific is Dufry’s worst region when it comes to sales. The company has duty-paid shops in Shanghai and Chengdu, as well as a presence in Hong Kong and Macau.
For Alibaba, the deal expands its exposure in China. Alibaba has been acquiring minority stakes in brick-and-mortar retail operations to develop a larger footprint in the physical commerce space.
As part of the deal, Alibaba has agreed to buy an equity stake of Dufry between 8.5% and 9.99%. A separate recent agreement resulted in private equity firm Advent International acquiring 20% of Dufry.
Proceeds from the deal are to be used by Dufry buy out its subsidiary Hudson Group and strengthen its own market position.