Alibaba $BABA 94.26, +8.14, +9.5% to split into six additional units:
cloud, Chinese e-commerce, global e-commerce, digital mapping and food delivery, logistics, media and entertainment.
Day after co-founder Jack Ma returned to mainland Chin
Alibaba Group will become a holding company overseen by current Chairman and Chief Executive Daniel Zhang, the company said Tuesday.
Alibaba’s wide-ranging businesses will be split up into six major areas: cloud, Chinese e-commerce, global e-commerce, digital mapping and food delivery, logistics, as well as media and entertainment.
The six business groups will have their own CEOs reporting to each of their boards of directors and be fully responsible for their performance, Alibaba said in its statement. Its domestic commerce business will remain a wholly owned unit of Alibaba, it added.
Each of the newly created entities can raise funds and pursue initial public offerings when ready, Mr. Zhang said in a letter to employees.
“The market is the best litmus test,” he said.
The move echoes previous sweeping reorganizations by Western tech giants such as Google, which created Alphabet Inc. as a holding company while separating its growing cast of businesses.
Alibaba’s announcement came a day after Mr. Ma reappeared in China at a time when Beijing is seeking to revive entrepreneurs’ confidence following years of regulatory clampdowns and Covid-19 restrictions.
The listing status of Alibaba’s shares in New York and Hong Kong won’t be affected, people familiar with the matter said. Alibaba’s Nasdaq-listed American depositary receipts climbed more than 6% in premarket trading on Tuesday in New York.
In 2021, The Wall Street Journal first reported that Mr. Zhang had been delegating more power to the heads of Alibaba’s business units, which had the potential to open the way for spinoffs and independent fundraisings.
The restructuring was part of a yearslong effort to build a nimbler corporate structure, Alibaba said in its statement. It reverses a centralization drive begun around 2018 when Mr. Ma sought to bring the company’s subsidiaries and affiliates into closer alignment, part of the so-called Alibaba Economy.
“This transformation will empower all our businesses to become more agile, enhance decision-making and enable faster responses to market changes,” said Mr. Zhang in its letter to employees.
Monday’s announcement wasn’t related to Mr. Ma’s return to China, people inside the company said.