Alibaba Group has agreed to a 33% equity stake in Ant Financial that will strengthen its strategic relationship pursuant to the series of agreements reached with Ant Financial in 2014.
Alibaba Group believes that deepening its relationship through an equity stake in Ant Financial will bring key strategic benefits to Alibaba, including advancing its New Retail strategy with mobile payments, increasing user acquisition and retention through collaboration with the Alipay digital wallet (“Alipay Wallet”), and enhancing the execution of the international expansion. In addition, the equity stake in Ant Financial enables Alibaba and its shareholders to participate in the future growth of the financial technology sector. Below is a press release issued today by the company on the transaction.
Alibaba Group Agrees to 33% Equity Stake in Ant Financial
Hangzhou, China, February 1, 2018 – Alibaba Group Holding Limited (NYSE: BABA, “Alibaba”) and Ant Small and Micro Financial Services Group Co., Ltd. (“Ant Financial”) today announced that pursuant to 2014 transaction agreements, Alibaba will acquire a 33% equity interest in Ant Financial.
The parties have agreed to certain amendments to their 2014 transaction agreements to facilitate the transaction. Under the terms of the amended agreements, Alibaba will acquire newly-issued equity from Ant Financial in exchange for certain intellectual property rights owned by Alibaba exclusively related to Ant Financial. There will be no cash impact to Alibaba following completion of the transaction.
Upon closing, the companies will terminate the current profit-sharing arrangement under which Ant Financial pays royalty and technology service fees in an amount equal to 37.5% of its pre-tax profits to Alibaba. Daniel Zhang, Chief Executive Officer of Alibaba Group, said,
“This transaction is a significant step for Alibaba to enhance our long-term strategic relationship with Ant Financial as we continue to pursue our mission to make it easy to do business anywhere. Importantly, an equity stake in Ant Financial enables Alibaba and our shareholders to participate in the future growth of the financial technology sector, as well as the benefits of user growth and improved customer experience.”
Eric Jing, Chief Executive Officer of Ant Financial, said, “We are pleased to strengthen our strategic relationship with Alibaba. This marks the next step in our collaboration to generate more strategic synergies and deliver tremendous value proposition to our customers. We look forward to continuing to work with Alibaba as we pursue our mission to bring the world equal opportunities.”
The transaction was reviewed and approved by a committee of non-executive directors, the majority of whom are independent under NYSE rules (the “Alibaba Independent Committee”), the audit committee of Alibaba’s board and the full Alibaba board of directors.
The closing of the transaction is subject to customary conditions. Alibaba will acquire the equity interest in Ant Financial through a Chinese domestic subsidiary.
Morrison & Foerster and King & Wood Mallesons acted as legal advisors, Credit Suisse acted as financial advisor and PricewaterhouseCoopers acted as tax advisor to the Alibaba Independent Committee. Wachtell, Lipton, Rosen & Katz, Sidley Austin LLP and Fangda Partners acted as legal advisors to Ant Financial.
A detailed summary of the transaction has been filed by Alibaba on Form 6-K with the Securities and Exchange Commission.
About Alibaba Group
Alibaba Group’s mission is to make it easy to do business anywhere. The company aims to build the future infrastructure of commerce. It envisions that its customers will meet, work and live at Alibaba, and that it will be a company that lasts at least 102 years.
About Ant Financial
Ant Financial Services Group is focused on serving small and micro enterprises, as well as individuals. Ant Financial is dedicated to bringing the world more equal opportunities through building a technology-driven open ecosystem and working with other financial institutions to support the future financial needs of society. Brands under Ant Financial Services Group include Alipay, Ant Fortune, Zhima Credit, MYbank. For more information on Ant Financial, please visit our website at www.antfin.com or follow us on Twitter @AntFinancial.