Alibaba to Invest $693 Million in Another China Courier, STO Express

Shares in Alibaba jumped nearly 4 percent intraday Monday on news that it has expanded its reach over China's logistics providers.

Author: CapitalWatch Staff   

The stock of Alibaba Group Holding Ltd. (NYSE: BABA) rose nearly 4 percent by midday Monday to $181.14 per American depositary share on news that the Chinese e-commerce titan is taking a 14 percent stake in another logistics provider, STO Express Co. Ltd.

The deal for $693.4 million will mark Alibaba's fourth significant investment in a Chinese courier company after it backed YTO Express Group Co. Ltd., Best Inc. (NYSE: BSTI), and ZTO Express (Cayman) Inc. (NYSE: ZTO).

Under the arrangement with STO, Alibaba will buy a 49 percent stake in a new subsidiary to be set up by the courier's controlling shareholder. The subsidiary will own 29.9 percent of STO, while Alibaba will by extension hold more than 14 percent of STO Express, according to a statement by STO.

Alibaba, in a separate statement, confirmed its investment in "one of the top five express delivery companies in China."

"We will deepen our existing collaboration with STO in technology, last-mile delivery across China and New Retail logistics," it said.

"This investment is a step forward in our pursuit of the goal of 24-hour-delivery anywhere in China and 72 hours globally," Alibaba added.

STO Express is one of several companies that works with Alibaba under Cainiao, its logistics division launched in 2013.

Cainiao Smart Logistics Network Ltd. provides software and shares data with warehouses, carriers and other logistics companies that help deliver packages to shoppers on Tmall and Taobao, Alibaba's largest e-commerce sites.

Cainiao competes with major players in China's logistics industry including Shenzhen-based SF Express Co. Ltd., which operates SF Airlines, as well as JD Express Inc., the transportation unit of another e-commerce giant, Ltd. (Nasdaq: JD).

As Alibaba's shares rose Monday, ZTO's dropped 31 cents early on before recovering to $20.25 apiece, up 10 cents from yesterday's close. Best was trading at $5.89 per ADS, down 8 cents.

(Reuters contributed to this article)