Alibaba Closes Deal With Russian Firms to Form Online-Shopping Platform
By Patrick Thomas
Chinese e-commerce titan Alibaba Group Holding Ltd. (BABA) closed a deal with Russian internet giant Mail.ru Group Ltd. (MAIL.LN) Wednesday to create what the companies say will be Russia's biggest online-shopping platform.
As part of a joint venture unveiled in September, Alibaba agreed to take a 48% stake in an e-commerce joint venture to be called AliExpress Russia JV. The rest of the new company will be held by Mail.Ru, Russia's second-largest telecommunications firm MegaFon (MFON.MZ), and the Russian Direct Investment Fund, the country's sovereign wealth fund, also known as RDIF.
The deal represents an unusually high-profile strategic partnership between Chinese and Russian tech companies. Mail.Ru started out in the late 1990s as an email service but now owns Russia's most popular social network, Vkontakte.
AliExpress Russia will be majority-owned by Russian shareholders and have two co-CEOs, one nominated by Alibaba Group and the other by Mail.ru.
Alibaba will receive MegaFon's existing 10% stake in Mail.ru as part of the transaction in exchange for a 24% stake in the AliExpress Russia, with about 30% of the voting rights. Alibaba and RDIF will also invest $100 million each in the venture and RDIF will own a roughly 13% stake in the venture.
"This JV is an important part of Alibaba's international expansion and step toward our goal of supporting 10 million small businesses reach profitability and serving 2 billion consumers around the world," Alibaba Chief Executive Daniel Zhang said in a statement.