Alibaba (NYSE: BABA) and Shen Guojun, the founder of Intime Retail (HKG: 1833), have requested that Intime's board seek shareholder approval of a proposal to privatize the Chinese department store operator. The acquisition would see Alibaba buy Intime's outstanding shares for HK$10 (~$1.29) apiece, representing a premium of roughly 42.25% over the closing price of HK$7.03 (~$0.91) on December 28, 2016. Under the proposal, Alibaba would become the controlling shareholder of Intime with a stake of approximately 74%.
Intime operates 29 department stores and 17 shopping malls with a particularly strong footprint in Zhejiang Province, the location of Alibaba's HQ. Alibaba currently owns a 28% stake in the brick-and-mortar outfit, making its initial investment in 2014. The deal comes as both Alibaba and Intime have recently seen sales slide and as the Chinese government looks to forge stronger links between digital and physical industries, according to Reuters.