Alibaba Group Holding Merges with E-Mart

Alibaba Group Holding (NYSE: BABA) is merging its South Korean operations with E-Mart’s e-commerce platform to strengthen its position in the competitive online retail landscape in South Korea.

Joint Venture

Following an exchange filing by E-Mart (KS: 139480), it has been confirmed that AliExpress International and Gmarket will form a joint venture, with each company holding a 50% stake. Both firms intend to invest further in the partnership, which will gain full ownership of Gmarket. According to Bloomberg, this venture could be valued at approximately $4 billion.

Market Impact

In response to the news, E-Mart shares rose by 5.5% in Seoul, increasing the company’s market capitalization to $1.4 billion. Alibaba’s shares, listed in Hong Kong, climbed by 2.6%.

Competition Landscape

The partnership will enhance competition against key domestic players like Naver Corp (KS: 035420) and Coupang LLC (NYSE: CPNG).

International Expansion

With growth in Alibaba’s core Chinese e-commerce segment slowing, the company is striving to expand internationally. In the September quarter, weak performance was noted in the domestic e-commerce business, although gains from the cloud division and international ventures like Lazada and AliExpress provided some offsets.

Strategic Consolidation

Headwinds in the e-commerce space are rising due to increased competition from emerging players like PDD Holdings Inc DRC (NASDAQ: PDD) and ByteDance. Co-founder Eddie Wu, who has been CEO for over a year, is focusing the company on consolidating its main operations and investing in high-growth areas.

Recently, Alibaba also agreed to sell its Intime department store unit to Youngor Fashion Co. for around $1 billion, part of an effort to streamline its business by divesting non-core assets. The e-commerce giant expects to record a loss of 9.3 billion yuan ($1.3 billion) on its original investment in Intime.