Alibaba is spending 28 billion Hong Kong dollars ($3.6 billion) to up its stake in Sun Art Retail Group from 36% to 72%, the company said in a statement Monday. The company will then make a general offer to shareholders to buy out the rest of the retail company.
The news sent shares in Sun Art up nearly 20% in Hong Kong. Alibaba’s Hong Kong listed shares rose about 1%.
Upping its stake in Sun Art signals that Alibaba is pushing for the “accelerated digitization” of Chinese consumers post-pandemic, according to Jefferies analyst Thomas Chong. Sun Art operates nearly 500 hypermarkets and supermarkets across China.
Alibaba “has been highlighting digitization as the greatest opportunity to change how people live and work,” and seeking “opportunities in traditional retail” by solving problems such as scalability and sustainability, Chong wrote in a note on Monday.
China’s online grocery sector is “set for explosive growth,” according to analytics company GlobalData.
As China emerged from lockdown restrictions earlier this year, 56% of shoppers were buying food and grocery online more frequently than before, the company said in a report in June. In the United States, about 30% of shoppers were buying food and grocery online more often than before, GlobalData found.