Alibaba’s $1.38 Billion Investment in ZTO Express

Ropes & Gray represented Alibaba Group on the deal

Alibaba Group Holding Limited (NYSE: BABA) and its logistic arm Cainiao Network, and ZTO Express (Cayman) Inc. (NYSE: ZTO) (“ZTO”), a leading and fast-growing express delivery company in China, executed a strategic agreement in which investors led by Alibaba and Cainiao will invest US$1.38 billion in ZTO in exchange for an approximately 10% equity stake in the company. The transaction is expected to close in early June, subject to customary closing conditions.

The investment will see Cainiao and ZTO deepen their collaboration in the transformation of China’s logistics industry amid the growth of New Retail, a concept developed by Alibaba that promotes seamless integration between online and offline commerce. The investment will further support both Cainiao and ZTO’s focus on building up first and last-mile pickup and delivery capabilities, warehouse management, cross-border logistics and technology-driven smart solutions.

New Retail links online and offline commerce through deep consumer engagement based on insights drawn from advanced technology and data analytics. Moving forward, New Retail will require investment in smart supply chains, retail technologies, advanced logistics and mobile payments. These investments are all aimed at delivering a better experience for both consumers and merchants.

Cainiao has the world’s leading smart logistics network. Its technological innovation for the industry includes e-shipping labels and smart sorting. It has the capability to provide same-day and next-day delivery in nearly 1,500 districts and counties in China, and now operates Cainiao Post, a network of last-mile stations covering communities in top 100 cities and around 1,800 university campuses across the country.

ZTO is a leading and fast-growing express delivery company in China. It has high-quality service capabilities across the country such as line-haul, last-mile, express delivery, in-city delivery, fulfilment and warehousing. Propelled by the rapidly growing e-commerce industry and enabled by early strategic investments in its network infrastructure and technology and innovation, ZTO is expanding its capabilities and product offerings to make a transformative contribution to the express delivery industry. Recent initiatives in building its logistics eco-system in areas including LTL transportation services, international logistics and supply-chain management have shown meaningful progress and results.

Ropes & Gray advised Alibaba Group with a team including private equity partner Peng Yu (Picture) and mergers & acquisitions partner Jim Lidbury.

 

Involved fees earner: Peng Yu – Ropes & Gray; Jim Lidbury – Ropes & Gray;

Law Firms: Ropes & Gray;

Clients: Alibaba Group Holding Ltd;