Slaughter and May is advising Alibaba Group Holding Limited (Alibaba) in relation to its disposal, through its wholly-owned subsidiaries Taobao China Holding Limited and A-RT Retail Holdings Limited, and through New Retail Strategic Opportunities Investments 1 Limited (over which Alibaba is able to exercise significant influence) (collectively, the Alibaba Group) of approximately 78.70% shares in Sun Art Retail Group Limited (Sun Art), to a company wholly-owned by DCP Capital Partners II, L.P. (DCP), for an aggregate consideration (including dividends but excluding interest) of HKD11.64 billion (approximately USD1.5 billion) (the Transaction). The announcement for the Transaction was published on 1 January 2025.
Under the sale and purchase agreement entered into between the Alibaba Group and DCP, Alibaba Group would be entitled to receive HKD1.55 per share. Assuming that the 2024 interim dividends declared by Sun Art would be paid to the Alibaba Group before completion of the Transaction, Alibaba Group will receive (i) HKD0.92 per share in cash upon completion of the Transaction; and (ii) the balance of HKD0.46 per share in cash (Second Payment Price), which will be deferred and payable on the earlier of (a) 30 June 2028 and (b) 39 months after the Transaction completion date (Second Payment Date). Alibaba Group will also receive interest payable (of up to HKD0.20 per share) in connection with the Second Payment Price of (i) base interest, accrued at 4.80% per annum from the Transaction completion date to the Second Payment Date, and (ii) variable interest, which will be payable if the 2027/2028 average adjusted EBITDA of the Sun Art Group exceeds the minimum threshold. Therefore, taking into account the interest payments, Alibaba Group could receive up to HKD1.75 per share (including dividends), equivalent to HKD13.14 billion (approximately USD1.69 billion).
Completion of the Transaction is conditional on certain conditions, including PRC antitrust approval.
Slaughter and May advised Alibaba on its initial investment in Sun Art in 2017, and subsequently advised Alibaba on its further acquisition of a controlling stake in Sun Art in 2020. Both acquisitions resulted in mandatory general offers for Sun Art.
Alibaba is dual-listed, with its shares listed on the Stock Exchange of Hong Kong (stock code: 9988) and American depository shares listed on the New York Stock Exchange (stock symbol: BABA). Its mission is to make it easy to do business anywhere. It aims to build the future infrastructure of commerce and envisions that its customers will meet, work and live at Alibaba, and it aspires to be a good company that will last for 102 years.
Sun Art is listed on the Stock Exchange of Hong Kong (stock code: 6808) and is primarily engaged in the operation of brick-and mortar stores and online sales channels in the PRC selling mainly fresh products, FMCG (fast moving consumer goods), textile, electric appliance and general goods.
Benita Yu, lead partner, comments: “We are excited to be involved in the complete cycle of Alibaba’s investment in Sun Art, having previously advised on Alibaba’s two acquisitions (with corresponding mandatory general offers) resulting in its current control over Sun Art. The Transaction involves interesting features that are unprecedented and we are pleased to have helped the client overcome challenging legal and regulatory requirements to arrive at the signing of the deal. Congratulations to Alibaba!”