Alibaba to surrender control of some business units

Oluwanifemi Ojo
Oluwanifemi Ojo
Jack Mi, CEO Alibaba

Alibaba Group has announced plans to monetize non-core assets and potentially give up control over some of its businesses.

According to Reuters, the reason for this is that the company is reinventing itself after a regulatory crackdown caused a significant drop of 70% in its shares.

The CEO of Alibaba Group, Daniel Zhang, who was recently seen in public after a long period of time stated that breaking up the company into separate businesses will lead to more agility for its units.

This will, in turn, enable them to launch their own initial public offerings at some point in the future.

This announcement comes just two days after Alibaba revealed the largest restructuring plan in the company’s history.

As part of this, the company will switch to a holding company structure, consisting of six distinct business units.

Each of these units will have its own CEO and board, which should lead to greater autonomy and effectiveness in their respective areas.

Alibaba’s business split raises the hopes of
Investors, as it results in a surge in the company’s stock price and other similar companies on Wednesday.

According to Reuters, they saw this as a positive sign that Beijing’s regulation of the corporate sector may be coming to an end.

Speaking to investors on a conference cann on Thursday, Zhang said, “Alibaba will be more of the nature of an asset and capital operator than a business operator, in relation to the business group companies.”

Further speaking on the same call, the CFO of Alibaba, Toby Xu said the group would “continue to evaluate the strategic importance of these companies and decide whether or not to continue to retain control.”

Share this Article
Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *