Chinese logistics company Best, which counts e-commerce titan Alibaba Group Holding among its investors, said it has received a preliminary buyout offer from a consortium including local rival Cainiao, the logistics arm of Alibaba that is preparing a planned US$1 billion IPO in Hong Kong.
Best said in a Monday statement that it had received a “preliminary non-binding proposal letter” from Best founder and CEO Shao-Ning Johnny Chou on behalf of a consortium of key figures and companies, including its chief strategy and investment officer, Denlux Logistics Technology Invest, Alibaba Investment, BJ Russell Holdings, and Cainiao Smart Logistics Investment.
The letter, dated November 3, 2023, and shared by Best on Monday, proposes the purchase of all outstanding shares in Best at a price of US$0.144 per ordinary share, or US$2.88 per American Depositary Share.
According to the letter, the consortium plans to fund the deal primarily through Cainiao’s own equity capital and cash. The consortium collectively owns about 49 per cent of the issued and outstanding shares of Best.
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Best said that its Board has formed a special committee consisting of three independent directors to evaluate and consider the proposal. One of those directors, Ying Wu, will chair the special committee.
Alibaba and Cainiao did not immediately respond to requests for comment on Monday.
The board cautioned shareholders and potential investors that there is no guarantee a definitive offer will be made or that an agreement relating to the proposed transaction will be finalised. It pledged to provide updates on the situation as required under applicable law.
Best, listed on the New York Stock Exchange, is a big player in the logistics sector in China and Southeast Asia, offering services including freight delivery, supply chain management, and global logistics services powered by its proprietary technology platform.
Its shares closed at US$2.39 in New York on Friday, up 3.9 per cent.
Cainiao has also made other moves this year, including an expansion of its express delivery services
Cainiao’s IPO could be Hong Kong’s largest this year and the first billion-dollar listing since August 2022 amid a challenging financial environment in the city.
The Hang Seng Index has fallen over 10 per cent year to date, with weak sentiment contributing to fewer new listings and a decline in deal volume.
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Cainiao, first established in 2013, has ballooned into a 100 billion yuan (US$13.7 billion) behemoth to become one of the country’s largest tech unicorns, with its revenue up 16 per cent in its 2023 financial year.
The company serves as the logistics backbone of Alibaba’s e-commerce empire, offering same-day delivery within mainland China and has recently been expanding its services internationally.
Alibaba, which also owns the South China Morning Post, currently holds about 70 per cent of Cainiao and is expected to retain a stake of over 50 per cent in the unit following the IPO.