Alibaba Group Holding Ltd. will overhaul its operations with a reorganization that the company says is “designed to unlock shareholder value and foster market competitiveness.”
The Chinese e-commerce giant announced Tuesday its plans to reorganize into six business groups and other investments. The six groups will have their own CEOs and boards of directors, while the overall company will still be led by Daniel Zhang, Alibaba’s
chairman and CEO.
Alibaba’s U.S.-listed shares were flying more than 6% higher in premarket trading Tuesday.
“The market is the best litmus test, and each business group and company can pursue independent fundraising and IPOs when they are ready,” Zhang said in a letter to employees, according to a post on Alizila, Alibaba’s corporate news site.
The post noted that while the units will be able to raise outside capital, the Taobao Tmall Commerce Group is the lone exception as it “will remain an Alibaba Group wholly owned unit.”
Alibaba’s six business groups will be its Cloud Intelligence Group, its Taobao Tmall Commerce Group, its Local Services Group, its Cainiao Smart Logistics group, its Global Digital Commerce Group, and its Digital Media and Entertainment Group.
The Cloud Intelligence unit will count Zhang as its CEO, which the Alizila post said was previously announced.
The post also stated that through the reorganization, “Alibaba will slim down middle and back office functions at the group level while only functions required for listed company compliance will be retained.”
Alibaba’s U.S.-listed shares have declined 25% over the past 12 months, as the KraneShares CSI China Internet ETF
has dropped about 1%.