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Chinese tech giant Alibaba Group has announced a plan to split up the company into 6 parts. The investors cheered its decision, sending its stock surging.
For the unversed, Alibaba Group is one of the largest tech giants on the earth, which was established by 18 people, led by Jack Ma, in 1999. Today, the company has several businesses across local and international stretches. The same includes e-commerce, digital media, entertainment, consumer services, Cloud and other services.
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Some of its most well-known subsidiaries are Taobao, Tmall, Freshippo, Aliexpress, Lazada, Alibaba.com, 1688.com, Youku, Alimama, Cai Niao and several others.
According to the plan, Alibaba Group Holding Ltd. will be splitting up its entire $220 billion business into Six main units: Global Digital Commerce, Cainiao Smart Logistics Group, Taobao Tmall Commerce Group, Cloud Intelligence Group, Local Services Group & the Digital Media and Entertainment Group.
Because Alibaba Group is a holding company, all companies will have their management and Board of Directors. Daniel Zhang, Alibaba's current CEO, will keep his position while also serving as CEO of the Cloud Intelligence Group.
This is the largest restructuring done by the company in its 24 years of existence. This move will allow the company to maintain flexibility improving its corporate structure. It also shields the other businesses from any adverse issues in a different group.
Moreover, the units could also consider fundraises and IPOs on their own in the future. Experts have praised it as a wise move for the company. The same also signals the end of Beijing's crackdown on tech firms.
JP Morgan, a global brokerage, has endorsed the proposed plan! They claim that such a split could result in Alibaba's stock doubling in value!
As a result, investors applauded the plans, causing the company's Hong Kong stock up 15% in a single session after the announcement. At reporting time, the stock of Alibaba Holdings was trading around HKD 96.40 per share.
- Aman Agarwal
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