Alibaba (BABA) is not happy with its dominance in China’s digital ad industry; it is now working to expand its offline presence too. The e-commerce giant is reportedly spending billions to own 6.62% stake in a digital signage firm Focus Media that reaches out to 200 million middle-class population.
Alibaba is expected to shell out around $1.43 billion to acquire the minority stake in the company that displays commercials in elevators and office lobbies.
The deal is apparently split into pieces as Alibaba would also invest $504.7 million to acquire a 10% stake in an entity that is controlled by Focus Media’s founder Jason Nanchun Jian. On the whole, Alibaba is making an investment of $2.23 billion, which will give it a total of 10.32% stake.
This latest move by the Amazon (AMZN) rival is part of its ‘new retail’ strategy to reduce the gap between online and offline channels. To develop its ‘new retail’ strategy, the company is increasing its investment in physical retail footprint as well as partnerships.
With this deal, Alibaba, which maintains a lead in online shopping sphere in its home market, hopes to strengthen its offline presence, as Focus Media has its presence across 300 Chinese cities.