Alibaba challenges Walmart with $3.6 billion investment in Chinese chain

Alibaba Group Holding Ltd. is diving deeper into brick-and-mortar by acquiring the controlling stake in the largest big-box retailer in China. 

The Chinese e-commerce giant will pay about $3.6 billion to take a controlling stake in Sun Art Retail Group Ltd., which operates 481 hypermarkets in China, where it is a major competitor to Walmart Inc. After the transaction is complete, Alibaba Group will own 72% of Sun Art.

Alibaba first invested in Sun Art back in 2017. Its new investment in the company will be made by acquiring 70.94% of equity interest in A-RT Retail Holdings, controlled by Auchon Holding of France. A-RT Retail holds about 51% of the equity interest in Sun Art.

“As the COVID-19 pandemic is accelerating the digitalization of consumer lifestyles and enterprise operations, this commitment to Sun Art serves to strengthen our New Retail vision and serve more consumers with a fully integrated experience,” Alibaba chairman and CEO Daniel Zhang said in a statement.

In a release, Alibaba stated that all physical Sun Art locations in China are integrated with the Alibaba’s Taoxianda and Tmall supermarket platforms for one-hour and half-day delivery options. 

Alibaba has been expanding Freshippo grocery stores in China, which provide in-person shopping and also double as fulfillment centers for online grocery delivery. Alibaba operated 214 Freshippo outlets as of its most recent earnings report, according to Reuters.