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Brands and distributors on Alibaba platform will now have access to the Southeast Asian consumer market

Alibaba Group and Lazada Group today announced that they have come into an agreement in which Alibaba will acquire a controlling stake in Southeast Asia’s leading e-commerce platform Lazada.

The transaction consists of an investment of approximately US$500 million in newly issued equity capital of Lazada, and acquisition of shares from certain Lazada shareholders, for a total investment by Alibaba of approximately US$1 billion.

Alibaba entered into a put-call arrangement with certain Lazada shareholders that gives Alibaba the right to purchase, and the shareholders the right to collectively sell, remaining stakes in Lazada at fair market value — those stipulations will exist during the 12 to 18 month period after the closing of the transaction.

With this deal, existing brands and distributors on Alibaba’s platform, as well as local merchants, will have access the Southeast Asian consumer market.

“With the investment in Lazada, Alibaba gains access to a platform with a large and growing consumer base outside China, a proven management team and a solid foundation for future growth in one of the most promising regions for e-commerce globally. This investment is consistent with our strategy of connecting brands, distributors and consumers wherever they are and support our ecosystem expansion in Southeast Asia to better serve our customers,” said Alibaba President Michael Evans in a statement.

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Meanwhile, Lazada Group CEO Max Bittner stated the acquisition will help the company to reach its goal to ‘provide 560 million customers in the region access to the broadest and most unique assortment of products’.

Lazada will also be able to leverage on Alibaba’s unique knowhow and technology to improve its services.

“We are very excited about joining forces with Alibaba and see significant synergies that will drive great benefits to our customers in Southeast Asia. Southeast Asia is an attractive mobile-driven consumer market that is highly fragmented and diverse with significant barriers to entry and a nascent modern retail sector that has large headroom for growth,” said Bittner.

Credit Suisse (Hong Kong) Limited acted as exclusive financial advisor to Alibaba and Goldman Sachs (Asia) LLC as exclusive financial advisor to Lazada.

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