Alibaba to dismantle the empire into six units, seeking public offerings

March 28 (Reuters) – Alibaba Group Inc (9988.HK) plans to split its business into six major units spanning e-commerce to the cloud in the biggest restructuring in its 24-year history, five of which have said they will explore fundraising or an initial public offering. . .

The company said in a statement that the six units are Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics Group, Global Digital Commerce Group, and Digital Media and Entertainment Group.

Each of the six will be managed by a CEO and a Board of Directors.

Daniel Zhang will continue to serve as Chairman and CEO of Alibaba Group, which will follow the holding company management model, and at the same time serve as CEO of Cloud Intelligence Group.

It said every other business and investment group would retain flexibility to raise outside capital and seek an initial public offering, with the exception of Taobao Tmall Group which handles its business in China and will remain a wholly owned unit of Alibaba Group.

Shares of US-listed Alibaba rose as much as 8% after the news.

“The original intention and core purpose of this reform is to make our organization more flexible and shorten the links of decision-making and response faster,” Zhang said in a letter to employees, seen by Reuters.

He said every business group had to actively deal with the rapid changes in the market and every Alibaba employee had to “return to the mindset of an entrepreneur”.

He also said the company would “reduce and reduce” middle and back office jobs, but did not detail the job cuts.

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News of the restructuring comes a day after Alibaba founder Jack Ma was spotted at a primary school in Hangzhou, making his first public appearance in mainland China in more than a year.

Ma left China in late 2021 as authorities unleashed a regulatory crackdown on the country’s tech sector.

Ma’s stay abroad came to symbolize a reversal of the fortunes of China’s private sector after his empire and the technology industry were the target of Beijing’s regulatory crackdown.

Stuart Cole said, “It seems a bit coincidental that this is happening just as Ma seems comfortable coming back. To me, it indicates something that Alibaba has been wanting to do for some time, but has been waiting for the opportunity to do so.” , chief macroeconomist at brokerage firm Equiti Capital.

He added that the restructuring “injects an element of flexibility and adaptability into the company, which is currently something of a behemoth.”

Additional reporting by Josh Horowitz in Shanghai, Lavanya Ahir and Tyachi Datta in Bengaluru; Editing by Arun Koyyur, Jason Neely, and Christina Fincher

Our standards: Thomson Reuters Trust Principles.

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