Alibaba to take 33% equity stake in Ant Financial
Alibaba Group (BABA) and Ant Small and Micro Financial Services Group announced that pursuant to 2014 transaction agreements, Alibaba will acquire a 33% equity interest in Ant Financial.
The parties have agreed to certain amendments to their 2014 transaction agreements to facilitate the transaction.
Under the terms of the amended agreements, Alibaba will acquire newly-issued equity from Ant Financial in exchange for certain intellectual property rights owned by Alibaba exclusively related to Ant Financial. There will be no cash impact to Alibaba following completion of the transaction.
Upon closing, the companies will terminate the current profit-sharing arrangement under which Ant Financial pays royalty and technology service fees in an amount equal to 37.5% of its pre-tax profits to Alibaba.
Daniel Zhang, CEO of Alibaba Group, said, “This transaction is a significant step for Alibaba to enhance our long-term strategic relationship with Ant Financial as we continue to pursue our mission to make it easy to do business anywhere.
Importantly, an equity stake in Ant Financial enables Alibaba and our shareholders to participate in the future growth of the financial technology sector, as well as the benefits of user growth and improved customer experience.”
The transaction was reviewed and approved by a committee of non-executive directors, the majority of whom are independent under NYSE rules, the audit committee of Alibaba’s board and the full Alibaba board of directors.
The closing of the transaction is subject to customary conditions. Alibaba will acquire the equity interest in Ant Financial through a Chinese domestic subsidiary.
Morrison & Foerster and King & Wood Mallesons acted as legal advisors, Credit Suisse acted as financial advisor and PricewaterhouseCoopers acted as tax advisor to the Alibaba Independent Committee.
Wachtell, Lipton, Rosen & Katz, Sidley Austin LLP and Fangda Partners acted as legal advisors to Ant Financial.
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