In a sign that Alibaba is exploring new ways to engage with consumers, the company announced in a filing to the New York Stock Exchange that it will pay $1.43bn (Rmb 9.63bn) for a 6.62% share of Shanghai-based Focus Media.
Founded in 2003, Focus Media claims to reach 200 million consumers via its outdoor digital advertising terminals – which are located in streets, subways and elevators – and it aims over the medium term to increase its presence to 500 cities, reaching 500 million people.
Alizila, a news portal owned by Alibaba, reported further details of the deal, which include plans to acquire another 5% interest in Focus Media within the next 12 months.
In addition, Alibaba will spend $504.7m to purchase a 10% stake in an entity controlled by Focus Media’s founder and chairman, Jason Nanchun Jiang, that owns 23.34% of Focus Media.
The multi-layered deal also sees an Alibaba-related entity, called New Retail Strategic Opportunities Fund, buying 1.37% of Focus Media, bringing the total investment (not including the expected additional 5% purchase) to $2.23bn and giving Alibaba a 10.32% stake.
According to Alizila, the investment aligns with Alibaba’s New Retail strategy, which integrates online and offline retailing to make shopping more engaging and convenient for shoppers.
And coupled with the New Retail push, the deal also enables Alimama, Alibaba’s digital marketing platform, to link up with Focus Media so that brands selling on its e-commerce platforms “can connect with these consumers and their rising spending power”.
Uni Marketing, Alibaba’s consumer analytics tool that is closely associated with the company’s New Retail concept, is also expected to be strongly involved in any digital offering made to brands.
Sourced from Alizila; additional content by WARC staff