Alibaba’s Cainiao makes buyout offer for local rival Best ahead of planned blockbuster Hong Kong IPO

Best, a Chinese logistics company partially owned by e-commerce giant Alibaba, has received a preliminary buyout offer from a consortium that includes its local competitor Cainiao. Cainiao is a subsidiary of Alibaba and is currently preparing for a $1 billion Initial Public Offering (IPO) in Hong Kong. The proposal was delivered in a letter from Best's CEO, Shao-Ning Johnny Chou, who represented the consortium. The letter proposed the acquisition of all outstanding shares in Best at a specific price. The consortium plans to finance the deal primarily through Cainiao's equity capital and cash reserves. Collectively, the consortium owns approximately 49% of Best's issued and outstanding shares.

Best's Board of Directors has formed a special committee of three independent directors to evaluate the proposal. The committee will be chaired by one of the directors, Ying Wu. Alibaba and Cainiao did not immediately respond to requests for comment on the proposal. The board has advised shareholders and potential investors that there is no guarantee that a definitive offer will be made or that an agreement will be reached regarding the proposed transaction. They have committed to providing updates as required by law.

Best, which is listed on the New York Stock Exchange, is a significant player in the logistics sector in China and Southeast Asia. It offers a range of services, including freight delivery, supply chain management, and global logistics services, powered by its proprietary technology platform. The company's shares closed at a higher price in New York on Friday. The proposed buyout from Cainiao comes after it filed for an IPO in Hong Kong in September, aiming to raise more than $1 billion. Cainiao has also expanded its express delivery services this year. The IPO could be Hong Kong's largest this year and the first billion-dollar listing since August 2022. Cainiao, established in 2013, has grown into a 100 billion yuan ($13. 7 billion) company and is one of the country's largest tech unicorns. It serves as the logistics backbone of Alibaba's e-commerce empire and has been expanding its services internationally. Alibaba, which also owns the South China Morning Post, currently holds about 70% of Cainiao and is expected to retain a majority stake following the IPO.