Benzinga - Close on the heels of announcing a corporate reorganization, Alibaba Group Holding Limited's (NYSE: BABA) management provided more clarity on the way forward.
What Happened: Jack Ma's Alibaba might cede control of some of its businesses after their initial public offerings, comments by CFO Toby Xu suggested.
“After going public, we will continue to evaluate the strategic importance of these companies to Alibaba, and on that basis, we will decide whether or not to continue to retain control,” Xu told analysts in a conference call on Thursday, Nikkei reported.
The reorganization plan announced Tuesday envisaged splitting the holding company into six new businesses and potential IPOs of all units, except the Taobao Tmall Commerce Group. Alibaba’s Chinese e-commerce business fetches roughly two-thirds of its total revenue, while the other five businesses contribute roughly 3-8% of revenue each, Nikkei said.
Eyeing Agility: While conceding the proposed reorganization is challenging, CEO Daniel Zhang said the transformation would allow all of the businesses to become more agile, Nikkei reported.
“However, the nature of the relationship will change. Alibaba will be more in the nature of an asset and a capital operator than a business operator in relation to the business group companies," Zhang reportedly said.
He also said the plan was in the works for quite some time and the announcement came in March because the company starts its new fiscal year in April.
The NYSE-listed shares of Alibaba closed Wednesday’s session 1.54% higher at $99.92, according to Benzinga Pro data. This came on top of the 14% gain recorded on Tuesday in reaction to the reorganization news.
In premarket trading on Thursday, the stock was slipping 0.74% to $99.18.
Read Next: 'Value Unlocked' For Alibaba Shareholders: Why Analyst Sees Reorganization As 'Huge Move'
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