Chinese tech giant Alibaba (NYSE:BABA) (HK:9988) has scrapped plans to list its logistics unit, Cainiao Smart Logistics, in Hong Kong. Instead, Alibaba plans to acquire Cainiao shares from minority investors at $0.62 apiece. This pegs the total offer size at nearly $3.75 billion.
Alibaba already owns a 63.7% stake in Cainiao. Following the offer closure, the company plans to realign Cainiao’s operations with Taobao, Tmall, and Alibaba International Digital Commerce Group. Cainiao’s Hong Kong IPO was pegged at about $1 billion in size. The withdrawal of plans comes at a time when the IPO market in Hong Kong is lackluster. Instead, Alibaba will now further integrate Cainiao into its eCommerce juggernaut.
Miscalculated Restructuring
Last year, Alibaba unveiled a restructuring plan that would have carved the company into six independent units. In recent times, it has canceled the spinoff of its cloud computing unit and put plans to list its grocery unit on the back burner. Further details on Alibaba’s plans for Cainiao are awaited in a press conference today.
What Is the Price Target for BABA?
Alibaba’s share price has tanked by nearly 15.7% over the past year. Overall, the Street has a Strong Buy consensus rating on Alibaba alongside an average BABA price target of $105.69. This points to a massive potential upside of 47.5% in the company’s share price.
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