Alibaba Group-led consortium, Jiangsu provincial government to buy stake in Suning retail arm

A consortium led by Alibaba Group Holding and the Jiangsu provincial government are nearing a deal to buy a stake in the retail arm of Chinese billionaire Zhang Jindong’s Suning empire, according to people familiar with the matter, the latest domino to fall in Beijing’s effort to clean up its heavily indebted conglomerates, Bloomberg reports.

The unit, Suning.com Co., could make an announcement  this week, said the people, who asked not to be identified as the information is private.

Zhang will no longer have control of the company after the deal, the people said, marking the end of his run as a high-profile entrepreneur who drove Suning into an array of businesses, including ownership of the Inter Milan soccer team.

Alibaba’s Hong Kong-listed shares climbed by 1.6 percent in Wednesday morning trading, while its American depositary receipts closed largely unchanged at US$229.44 on Tuesday in New York.

Suning.com, one of China’s biggest retailers of appliances, electronics and other consumer goods, had a market value of about 52 billion yuan (US$8 billion) before a trading halt on June 16.

It’s been in trouble for some time: the retail business was weakened by the slowdown in spending during the pandemic, and concerns about its cash flow intensified in September, when Zhang waived his right to a 20 billion yuan payment from China Evergrande Group, the world’s most indebted property developer.

The stock tumbled to a nearly eight-year low in Shenzhen earlier this month after a Beijing court froze 3 billion yuan worth of shares held by Zhang -- representing 5.8 percent of Suning.com, and as creditors agreed to extend a bond for Suning Appliance Group Co., which is owned by Zhang and fellow co-founder Bu Yang.