Alibaba acquires HiChina to strengthen its IT services to SMEs

Alibaba (HKSE1688) announced the acquisition of HiChina 中国万网  (not more than 99.67 percent) for less than US79.06 million.

Morgan Stanley reports that the acquisition of HiChina has limited impact on Alibaba’s financial results next year. In the long term, it builds synergies with HiChina which provided more than 20 million mainland SMEs. It is expected  to strengthen the Hang Zhou-based company’s IT  technology; and through cross-selling both companies can enhance their  customer base “stickiness”.

Found in 1996, HiChina is an Internet application service provider covering the business areas in domain registration, hosting and enterprise email system.  Its 550 staffs will be joining with Alibaba, according to Alibaba.com CEO David Wei.

HiChina’s product offering will become part of Alibaba.com’s Information Technology Business Unit (ITBU), which is focused on providing small businesses with a comprehensive solution to challenges that arise from the implementation of hardware, software and Internet-based services as well as IT maintenance.

According to the terms of the deal, Alibaba.com will acquire 85 percent of HiChina for a cash consideration of RMB435.42 million (US$63.75 million) with an additional 14.67 percent retained by the founders of HiChina, who will continue to be involved in daily management of the company. Dependent upon HiChina reaching certain performance targets, the founders of HiChina have an option to sell their 14.67 percent equity interest in HiChina to Alibaba.com over the next three years for an additional consideration of RMB104.56 million (US$15.31 million) in cash.

Find out more details about Alibaba.com to buy stake in Chinese e-commerce firm fromReuters.

Alibaba-and-HiChina

 
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