Alibaba.com to Acquire HiChina
Sohu IT, 9/28/09
Chinese B2B e-commerce firm Alibaba.com (1688.HK) has entered into an agreement to purchase up to 99.57% equity interest in China Civilink, which operates in China under the name HiChina Web Solutions. Alibaba.com will initially acquire an 85% equity interest in China Civilink for a total cash consideration of USD 63.75 mln. China Civilink’s founders will also be granted a put option, exercisable over a three-year term from 2011 to 2013 and conditional on China Civilink meeting certain post-completion performance targets, to sell Alibaba.com an additional 14.67% equity interest in China Civilink for as much as USD 15.31 mln.
The China Civilink Group, which operates the website www.net.cn, is engaged primarily in the provision of Internet infrastructure services in China, including domain name services, web and server hosting services, e-mail hosting services and website design and development services.
Alibaba.com expects the acquisition to bring four key assets: a large new customer base (HiChina has approximately 200,000 customers, the majority of which do not overlap with the existing Alibaba.com customer base), new value-added applications, advanced and automated “do it yourself” (DIY) website technology and a strong management and operating team. Alibaba.com believes the technology offerings and value-added services gained in the acquisition will enable entrepreneurs to open online businesses more easily, aiding in such small-business challenges as procurement, sales, management and financing.
According to the agreement, the acquisition will be completed by year-end at the earliest, while HiChina's brand will be preserved along with relatively independent operations from Alibaba. Once the acquisition is complete, HiChina's products and services will be subsumed under Alibaba's small-business IT department. HiChina's management will continue to serve the company, maintaining responsibility for the company's daily operations and management. The acquisition is not expected to cause any layoffs; rather, HiChina will continue hiring new staff.
Editor's Note: HiChina previously denied rumors of an Alibaba takeover. Please see "HiChina Denies Alibaba Acquisition Rumor," MD, 9/17/09 issue.
Keywords: B2B e-commerce Internet Alibaba HiChina 1688.HK M&A Civilink SME
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