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The Alibaba IPO is scheduled for 2014, and the Chinese e-commerce company has remained busy throughout the past year, spending more than $2.7 billion on acquisitions.
But this week, Alibaba Group Holding Ltd. made a surprising acquisition when it bought a minority stake in a Chinese department store retailer. On Monday, Alibaba announced that it had spent nearly $700 million for a 25% stake in Intime Retail Group.
Intime owns 36 department stores and shopping centers in China and reported revenue of more than $781 million in 2013. The company has a market value of approximately $17.7 billion.
Shares of Intime, which trade on the Hong Kong Stock Exchange, jumped 17% on Monday following the news and touched a 52-week high of $10.60.
Intime's stores offer high-end luxury brands, and the acquisition allows Alibaba to claim space in another major market. Recently, Alibaba purchased a 60% stake in the Chinese entertainment company ChinaVision and a 10% stake in the appliance maker Haier Electronics Group Ltd.
Clearly, inserting its brand into numerous industries is Alibaba's strategy ahead of its highly anticipated and possibly record-breaking IPO.
But the Intime acquisition isn't just about breaking into the brick-and-mortar retail market for Alibaba.
It's about strengthening Alibaba's position in the e-commerce market – an e-commerce market that will continue to make Alibaba a global leader and push its IPO into record territory…
Alibaba IPO: Leading a $420 Billion Market
At the time of the Intime acquisition, Alibaba officials detailed their plan to bridge its e-commerce business with traditional retail. Alibaba believes it can use its massive online customer base to help Intime improve its e-commerce business.
"We see significant opportunities to extend our e-commerce platform to physical retail, developing a more engaging, omnichannel and digitally connected shopping experience," Alibaba's Chief Operating Officer Daniel Zhang said. "[The partnership] will allow for the increased integration of online technologies at physical points of sale."
Officials also announced an "online-to-offline," or O2O, joint venture among the companies. According to Reuters, the O2O model will suggest shopping trips or purchases based on a consumer's location. The plan is to tap into the burgeoning mobile e-commerce market, and Alibaba will control 80% of the O2O project.
Advancing Intime's position in the e-commerce industry is Alibaba's main goal. And it's Alibaba's presence in China's e-commerce market that will send its 2014 IPO to record highs…