Just two years after selling its domestic express delivery business, Baishi Group is about to undergo another major change.
On the evening of November 6th, Baishi Group disclosed that the company's board of directors had received a preliminary non binding privatization proposal signed on November 3rd, 2023. The buyer alliance includes major shareholder Alibaba and its logistics company Cainiao, among others.
Specifically, the privatization proposal comes from a consortium composed of founder, chairman, and CEO of Baishi Group, Zhou Shaoning, Chief Strategy and Investment Officer, Zhou Shaojian, Denlux Logistics Technology Investment Inc., Alibaba Investment Limited, BJ Russell Holdings Limited, and Cainiao Smart Logistics Investment Limited.
According to the announcement, the acquirer alliance plans to acquire all issued common shares of Baise Group, including Class A common shares of companies not yet beneficially owned by the acquirer alliance, for cash at $0.144 per Class A common share or $2.88 per American depositary share (1 American depositary share representing 20 Class A common shares).
The board of directors of Baishi Group stated that the company has not yet made any decision on the proposal or proposed transaction, and cannot guarantee that the buyer will make a final formal acquisition offer, nor can it guarantee that any transaction will be concluded in the future.
Perhaps boosted by the privatization plan, Baishi Group's stock price has experienced a surge. As of the close of November 6th US Eastern Time, Baishi Group's stock price rose 10.88% to $2.65 per share.
After domestic express delivery became extremely popular, Baishi is moving towards privatization again
The development of Baishi Group in recent years can be described as tortuous.
In 2007, Zhou Shaoning, known as one of the "three carriages" of Google China, resigned from Google and founded the logistics company Baishi Logistics Technology in Hangzhou. Starting with a smooth start, Baishi has been expanding since 2010 and has successively acquired Huitong Express to establish Baishi Express, later known as Baishi Express; Acquire Quanjitong to establish Baishi Express and expand its express business; Afterwards, they successively developed international logistics and other businesses.
In the tenth year of its establishment, Zhou Shaoning led Baishi Group to ring the bell for listing on the New York Stock Exchange. However, Baishi Group, which has embarked on the path of capital, did not experience the expected explosion. Among them, Baishi Express, which has the largest revenue share, is on a downward trend. As of the second quarter of 2021, its share in the Chinese express delivery market has gradually shrunk from 12% in the previous high period to 8%.
In October 2021, the domestic express delivery price war was raging, and Baishi Group sold its assets and transferred its domestic express delivery business to Jitu Express for approximately 6.8 billion yuan. At that time, Zhou Shaoning stated that Baishi Group would concentrate its energy and resources to further promote the deep integration of supply chain, express transportation, and international business, accelerate business development, further improve organizational efficiency and professional capabilities, and adapt to longer-term market competition.
But the Baishi Group, which survived with its broken arm, did not completely reverse the adversity.
Over the past two years, Baishi Group has reorganized its business structure and positioned Baishi Supply Chain, Baishi Express, and Baishi International as its three major businesses. Based on the performance in 2022, Baishi Group's total revenue was 7.74 billion yuan, of which express transportation, supply chain, and international business recorded revenue of 4.89 billion yuan, 1.82 billion yuan, and 920 million yuan, respectively.
However, the profitability of Baishi Group is not very optimistic. Since its listing, except for 2021, it has been in a loss state in all other years. In the first half of this year, due to two consecutive quarters of profit in the Baishi supply chain and other reasons, the loss range of Baishi Group narrowed, recording a net loss of approximately 417 million yuan.
Since Baishi Group sold its China express business to Jitu Express, Baishi's current business has not shown much improvement. Zhao Xiaomin, an expert in express logistics and CEO of Guanshuo Capital, told Times Finance that from a capital market perspective, Baishi Group's market value has been hovering below $100 million for a long time and has undergone multiple stock conversions without the need to continue listing. Privatization is an inevitable outcome expected by the market.
As early as early as 2022, Baishi Group received a delisting warning from the New York Stock Exchange due to its average closing price of less than $1 per ADS for 30 consecutive trading days. Moreover, the liquidity and valuation of Chinese concept stocks in the US stock market are currently low, and the financing role of listed platforms is also decreasing.
Formerly the "biological son" of Alibaba, currently holding over 30% of the shares
The high opening and low exit of Baishi Group is regrettable, as it was previously known as Alibaba's "son".
In 2008, the second year of its establishment, Baishi received angel round financing from Alibaba, which gave Baishi the confidence to embark on a crazy acquisition and expand its business.
Public information shows that before going public, Alibaba had already participated in five rounds of financing by Baishi. According to the SEC documents submitted by Baishi before its listing, Alibaba holds 75831692 shares, with a shareholding ratio of 23.4%, surpassing the founder Zhou Shaoning; If you add the 5.6% stake held by Cainiao, the Alibaba Group holds nearly 30% of the shares. As of February 2023, Alibaba remains the largest shareholder of Baishi Group, holding approximately 32.7% of the equity. Currently, Wan Lin, the current President of Cainiao, and Hu Xiao, the Managing Director of Alibaba Strategic Investment, are directors of Baishi Group.
Both parties also had close business cooperation in the early stages. In 2015, Alibaba and Baishi signed a strategic cooperation agreement, making Baishi the preferred supplier of Alibaba's Taobao logistics services and announcing deep cooperation in logistics technology, warehousing, distribution, and other areas.
It is from this point in time that Alibaba's logistics landscape has been expanding day by day. After establishing its own logistics platform Cainiao in 2013, Alibaba invested in Yuantong Express in 2015, joined forces with Cainiao to invest in Zhongtong Express in 2018, and invested 4.665 billion yuan in Shentong Express in 2019. The cumulative investment in well-known domestic express delivery companies has exceeded 20 billion yuan, holding shares in four major private express delivery companies: Shentong, Yuantong, Zhongtong, and Baishi.
As Baishi Group sells its most valuable domestic express delivery business, its position in the Alibaba logistics landscape has become increasingly awkward.
At the same time, Alibaba's Cainiao is also developing supply chain and international business, which overlaps with the existing business layout of Baishi Group. In Zhao Xiaomin's view, if the final privatization is completed, the focus will be on whether Baishi Express, Baishi International business, and supply chain business will be integrated into the Cainiao system. If international business can be integrated into Cainiao, it will be a supplement to Cainiao's existing business, especially in Southeast Asia
Not only is it beneficial for novices, but for Alibaba, which has seen the fastest growth rate of overseas business in recent years, the current business support of Baishi Group also has certain temptations.
At present, Baishi Group's international business is mainly distributed in Southeast Asia, which is also one of the key markets for Alibaba International's commercial sector. In July of this year, Alibaba injected an additional $845 million into its Southeast Asian e-commerce platform Lazada, marking the fourth injection in nearly a year; On October 31st, Alibaba's B2B cross-border e-commerce platform, Alibaba International Station, officially launched the Southeast Asian Pavilion. All kinds of actions reveal Alibaba's ambition for the Southeast Asian e-commerce market.
Although Cainiao has been deployed in Southeast Asia for a long time and has a certain logistics infrastructure hub, greater assistance is still needed to seize a larger market and cooperate with Alibaba's overseas e-commerce development.
Since its official deployment in Southeast Asia in 2019, Baishi Group has established local express delivery networks in Thailand, Vietnam, Malaysia, Cambodia, and Singapore, which is precisely the terminal capability that many overseas express delivery companies such as Cainiao lack. As of June 2023, Baishi Group's international business has covered 7 overseas countries, with 33 self operated express delivery distribution centers and over 1300 branches in Southeast Asia, and an overseas warehouse management area of 40000 square meters.
However, it is worth noting that some of Baishi Group's businesses, including international businesses, are still losing money. If privatization is successful, how Alibaba and Cainiao can lead Baishi to profitability is also a significant challenge.
On the other hand, the IPO of the rookie is also on the horizon. Recently, Reuters' IFR quoted news that Cainiao has recently started non trading roadshows with Asian investors to prepare for the upcoming Hong Kong IPO, and the scale of this IPO is relatively large; Previously, it was reported that Cainiao's IPO fundraising would exceed $1 billion.
With Baishi moving towards privatization and delisting, can the former "son in law" feed back the development of Alibaba and Cainiao?