Phoenix Technology News, February 21st - Chairman and CEO of Alibaba Group, Jack Ma, has released an internal email addressing the decision to privatize Alibaba's B2B listed company. In his statement, Ma expressed that Alibaba’s B2B business is facing significant challenges and requires accelerated transformation and upgrading. However, due to constraints imposed by its listed company structure, minor adjustments are no longer sufficient for fundamental improvements in the B2B sector. Out of responsibility to the shareholders of B2B, a decision has been made to privatize the B2B segment.
Below is the full text of Jack Ma's internal email:
Dear Alibaba colleagues,
I am sure many of you have seen the announcement from the Hong Kong Stock Exchange. Alibaba Group has formally extended a privatization offer to Alibaba Network Limited (1688.HK), our listed entity in Hong Kong. We plan to purchase all outstanding shares at HKD 13.5 per share, thereby completing the privatization of our B2B business. The success of this privatization will depend on the voting results of minority shareholders and the approval of relevant regulatory authorities. All procedures will be conducted openly, transparently, and legally.
Back in November 2007, just before the onset of the global financial crisis, our B2B business successfully went public. Over the past few years, the global economic landscape has undergone significant changes. Nevertheless, as the flagship of the entire group and the first-born within the family, our B2B unit has made extraordinary contributions to the development of the group and to the growth of e-commerce in China. Especially during the financial crisis, it remained committed to serving small and medium-sized enterprises (SMEs). For this, we are deeply grateful.
However, we are also acutely aware that with the further tightening of international and domestic economic environments, especially given the immense pressures faced by SMEs such as rising raw material costs, currency fluctuations, and increased labor costs, our B2B business model is encountering significant challenges and requires accelerated transformation and upgrading. These are issues we have thought about, agonized over, and continuously strived to address. Yet, constrained by the structure of being a publicly listed company, our determination to upgrade has not been strong enough, and our actions have not been thorough enough.
2012 will be the first year of Alibaba Group implementing its "self-cultivation" strategy. We will focus on building an open, transparent, fair, and stable e-commerce ecosystem. To truly serve and help SME clients in future conditions, we must emphasize coordination and cooperation among the various subsidiaries within the group.
This business upgrade involves a wide scope, complex systems, and a massive scale. It will undoubtedly have a considerable impact on Alibaba B2B's revenue in the coming years. Our experience from reforms in recent years tells us that only by looking towards the future can we secure a better tomorrow. Minor adjustments are no longer sufficient for fundamental improvements in B2B.
Based on these considerations and out of responsibility to the shareholders of B2B, we have decided to privatize the B2B business and conduct comprehensive adjustments, reforms, and upgrades to better serve our customers.
Some people say that when we went public, we only raised $1.7 billion, but now privatizing will cost more than $2 billion, making it seem like a losing proposition. Some suggest we could buy back the shares at a lower price. But this is not the style of Alibaba. We are grateful to the B2B colleagues who have worked hard and to the shareholders who have consistently supported us. For the support and companionship you have provided over the past four plus years since our IPO, we have decided to express our gratitude and respect with the utmost sincerity and fairness. We hope and must give all shareholders a chance to make their choice.
Just as our IPO was the starting point rather than the end of Alibaba's development, today's privatization is also not the endpoint but a new beginning. Colleagues in B2B, all Alibaba members, the responsibilities on our shoulders remain unchanged. We must continue to serve SMEs and realize our vision of "making doing business easy." To achieve this, we must change ourselves.
Repairing the roof while the sun shines brightly; only by daring to let go of today's success can we possibly reach higher levels!
Alibaba people, prepare to get to work!
Jack Ma