HONG KONG (Reuters) – New York-listed Best Inc, a Chinese logistics company backed by e-commerce giant Alibaba Group Holding Ltd, is considering a sale as part of a strategic review, six people familiar with the matter said. .
With the approval of Alibaba, its largest shareholder, Best reached out to financial advisors to explore options as its shares underperformed and are worth a fifth of its IPO price in 2018, two of the people involved in the discussions said.
Billionaire Jack Ma’s Alibaba, who owns 33% of the company, as well as Best founder and CEO Johnny Chou, who has an 11% stake on a fully diluted basis, may both end up selling their shares, they said. five of the people.
No formal sales process has been initiated, and the company and Alibaba have not decided which option to take as the strategic review is still ongoing, people have warned, including two who have been contacted with a sale.
People refused to be named as the information is confidential.
A spokesperson for Best denied a sale was being studied. He said Chou continued to believe in the “bright future and long-term value” of the company’s integrated smart supply chain and logistics solutions and had no plans to sell his stake.
The company, which has a market value of $ 790 million, did not comment on other matters, including whether it was conducting a corporate review.
Alibaba said in an e-mailed statement that the information was incorrect, but it was not processed.
The best discussions are taking place against the backdrop of a regulatory crackdown by Chinese authorities over Ma’s business empire, including an antitrust investigation into Alibaba and a more thorough scrutiny of its financial subsidiary Ant Group.
Reuters was unable to determine if the potential sale is linked to the investigation.
The e-commerce group began considering a share disposal late last year after it found it difficult to integrate Best with other logistics companies in its portfolio, two of the people involved in the discussions told Reuters.
The best advisors selected to suggest strategic options towards the end of 2020 and reached out to a number of buyers, including major domestic deliveries SF Holding Co Ltd and private equity firms to sell the shares, they said.
One of the potential buyers said that his company had received what he described as a “teaser” of a deal on a stock sale by Best late last year and later on raising funds for one of its units. .
SF did not respond to a request for comment.
Other options the company is considering include raising funds for its freight delivery unit, three of the sources said. Best could also sell its finance leasing business, one said.
The agreement, if initiated and completed, will add to a consolidation of the logistics sector in China. Reuters reported in December that retailer JD.com and Carlyle, among others, are bidding for South Korean group CJ’s logistics business in China.
Best was founded in 2007 by former Google executive Chou and debuted in New York in 2017. With a 12% share of the Chinese express delivery market in 2019, it is one of several couriers working with Alibaba’s logistics division. Cainiao.
The company’s shares have fallen nearly 70% in the past year as its earnings have been hit hard by the fallout from the COVID-19 pandemic. By comparison, the S & P / BNY Mellon China Select ADR index, which tracks New York-listed Chinese companies, gained 45% over the same period.
Reuters reported in August that Best was seeking a Hong Kong listing for its express delivery and freight businesses, keen to increase its valuation and establish an investor base closer to China.
But listing prospects were undermined by falling share prices and weak quarterly results, the two people quoted earlier said.
($ 1 = 6.4630 Chinese renminbi yuan)
Reporting by Julie Zhu and Kane Wu; Editing by Sumeet Chatterjee and Carmel Crimmins