E-commerce conglomerate Alibaba Group Holding Ltd. has invested a large stake in U.S.-based daily deal site Groupon, as it pushed further with its overseas expansion, China Daily reported.
The report said that the e-commerce giant bought 33 million shares of the NASDAQ-listed Groupon Inc. According to FactSet data, the purchase is about 5.6 percent of Groupon shares outstanding, sufficient to make Alibaba the fourth largest shareholder.
Groupon stocks surged about 40 percent in trading on Tuesday, Feb. 16, which came after Alibaba disclosed its investment in a SEC regulatory filing last Friday, Feb. 12. the report said.
The report added that Alibaba did not divulge the amount of its investment in Groupon.
According to analysts, Alibaba's investment in the Chicago-based Groupon is related to the e-commerce giant's plan to sell a stake in the Chinese group buying player Meituan-Dianping.
Alibaba needs a strong alliance to fight against its rivals Tencent Holdings Ltd. and Baidu Inc. as it is looking into China's booming online-to-offline sector, which includes daily deals related services such as restaurant booking and movie ticket buying.
"Koubei, the group-buying website backed by Alibaba, is relatively small when it comes to a fight with the Tencent-backed Meituan-Dianping," Lu Zhenwang, an independent Internet expert and the chief executive officer of the Shanghai-based Wanqing Consultancy, said.
"Through investing into Groupon, Alibaba is expected to get some technology support, such as improving the experience of booking seats at restaurants, from the U.S. group-buying pioneer," Lu added.
As part of its expansion scheme, Alibaba invested billions by buying or acquiring shares in various other companies worldwide. In 2015, it invested more than $100 million in Mei.com; $118 million in SoftBank Robotics; $120 million in mobile gaming company Kabam; $134 million in Yueke, a ticket booking and theater management service; $193.6 million in China Business News; $200 million in Snapchat; and $266 million to acquire the parent company of the South China Morning Post.