(Yicai) March 27 -- Alibaba Group Holding has pulled the initial public offering of Cainiao Smart Logistics Network, the Chinese e-commerce giant’s courier unit, and will instead offer as much as USD3.75 billion to buy the 36 percent it does not own already.

An IPO under the current market conditions would not reflect Cainiao’s strategic value, Chairman Joseph Tsai said on a conference call with analysts late yesterday.

The decision to withdraw the application to list Cainiao, China's third-biggest e-commerce courier by revenue, means that Hangzhou-based Alibaba has now shelved a plan set out a year ago to spin off its cloud, logistics, and grocery arms for separate stock market listings.

Supermarket chain Freshippo, also known as Hema Fresh, pulled its proposed IPO last September, while the spin-off and listing of cloud computing arm Alibaba Cloud was called off in November due to the uncertainty surrounding US chip export curbs.

“Given the strategic importance of Cainiao to Alibaba and the significant long-term opportunity we see in building out a global logistics network, we believe this is an appropriate time to double down on Alibaba's investment in Cainiao,” Tsai said. 

Cainiao’s minority shareholders, which include staff, can accept 62 US cents per share or continue to own them, Alibaba said in a statement late yesterday.

After the offer, which values Cainiao at USD10.3 billion, Alibaba plans to align Cainiao’s business to better achieve strategic synergies with Taobao and Tmall Group and Alibaba International Digital Commerce Group as well as help the unit in a long-term strategic expansion of its global network.

Cainiao has the opportunity to become a leading platform serving global clients via more sustained infrastructure investment and expansion of its international logistics network, Tsai said, adding that this requires long-term vision, investment, and patience. 

Founded in 2013, Cainiao has a 16.4 percent share of China’s e-commerce delivery market and is the world's largest cross-border logistics firm based on package volume.

Cainiao filed to list in Hong Kong last September. “The proposed spin-off should better reflect the value of Cainiao on its own merits and increase its operational and financial transparency,” Alibaba said at the time.

From Spin-Offs to Teamwork

A refocus on its core business became necessary for Alibaba in the face of difficulties in increasing e-commerce revenue and the slow growth of income from retail business customer management at Taobao and Tmall. The firm's current strategic focus is to push for collaboration among its different group businesses, Tsai said previously.

Alibaba has set up special teams to drive closer cooperation among its various businesses to maximize the group’s value. Tsai said Alibaba will still consider separate financing for the businesses, but will not rush it. 

Alibaba has been shrinking its non-core businesses over the past few months. Last month, Tsai flagged the possibility of Alibaba offloading its traditional physical retail operations as they do not form part of its core business, but added that this could take time because of the current market situation.

Alibaba also has been scaling back its external interests. This month, it sold stock in Chinese video streaming platform Bilibili worth USD360 million and sold USD314 million of electric vehicle maker Xpeng’s US-listed shares.

After no longer seeking public fundraising, an urgent challenge for Alibaba's various businesses will be how to turn a profit, given that the parent company is no longer seeking continuous expansion, at least in the short term.

With Alibaba’s expansion halted at least temporarily, earnings growth will become a more pressing challenge for the various businesses under its umbrella.

Editors: Tang Shihua, Martin Kadiev