Shares of Sun Art have climbed 28% this year, giving the company a market value of about US$2.2 billion ($2.82 billion).
Sun Art was suspended from trading in Hong Kong on Friday morning, pending a statement under the takeovers and mergers code. Alibaba’s stake in Sun Art could also attract interest from other international buyout funds, the people said.
Deliberations are at an early stage, and there’s no certainty they will lead to a deal, according to the people.
Representatives for DCP and Sun Art declined to comment, while spokespeople for Alibaba and Hillhouse didn’t immediately respond to queries.
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Some top shareholders in Chinese companies have recently been cashing out from their holdings, taking advantage of improving market conditions brought on by an adrenaline shot to the country’s economy. Hong Kong’s Hang Seng Index has risen roughly 21% this year.
Alibaba has in recent years invested billions of dollars in companies including Sun Art and electronics retailer Suning.com as part of its strategy to try and modernise old-economy retail using data and online services.
Eddie Wu, who became chief executive officer last year, has sought to revert to its core business of e-commerce and cloud services. The company has also been considering selling its InTime department store arm, Bloomberg News reported in February.
Alibaba paid US$3.6 billion in 2020 to acquire a controlling stake in Sun Art, in which it had already invested years earlier. Sun Art runs hundreds of hypermarkets across China under brands including RT-Mart. It also has a distribution and storage network that supplement Alibaba’s own efforts in fresh produce.
