- Announcement could come as soon as this week, people say
- Billionaire founder Zhang won’t have control after deal
A consortium led by Alibaba Group Holding Ltd. and the Jiangsu provincial government are nearing a deal to buy a stake in the retail arm of Chinese billionaire Zhang Jindong’s Suning empire, according to people familiar with the matter.
The unit, Suning.com Co., could make an announcement as soon as this week, said the people, who asked not to be identified as the information is private. Zhang will no longer have control of the company after the deal, the people said.
Suning.com’s shares have been halted since June 16, pending major matter announcement. The stock tumbled to a nearly eight-year low in Shenzhen after a Beijing court froze 3 billion yuan ($464 million) worth of shares held by Zhang -- representing 5.8% of Suning.com, and as creditors agreed to extend a 2.89 billion yuan bond for Suning Appliance Group Co., which is owned by Zhang and fellow co-founder Bu Yang.
Negotiations are ongoing and a deal could still be delayed or fall apart, the people said. A representative for Suning declined to comment, while representatives for Alibaba and the Jiangsu government didn’t immediately respond to requests for comment.
State-backed investment should relieve liquidity tightness that was exacerbated by Suning’s links to China Evergrande Group, the world’s most indebted property developer. Zhang waived his right to a 20 billion yuan payment from Evergrande in September, helping to save the company but putting pressure on Suning’s cash flow.
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