By Julie Zhu and Josh Horwitz
HONG KONG/SHANGHAI (Reuters) – Alibaba Group Holding Ltd and Chinese state-backed firms are exploring bids for a stake in Unisplendour Corp, a cloud computing infrastructure firm, that could fetch as much as $7.7 billion, people familiar with the matter said.
Chip conglomerate Tsinghua Unigroup, which is saddled with some $31 billion in debt, is looking to divest its 46.45% stake in Shenzhen-listed Unisplendour as more of its bond payments are coming due, they said.
Potential suitors include Wuxi Industry Development Group, a firm owned by the government of the eastern Chinese city of Wuxi, Beijing government-owned Beijing Electronics Holdings and state-backed semiconductor investment fund JAC Capital, said the people. They were not authorised to speak on the matter and declined to be identified.
If Alibaba submits an offer due by the July 20 deadline for binding bids, it will team up with a firm owned by a local government, said two of the people. They did not disclose the name of the potential partner.
A successful transaction for the e-commerce giant would be the first since Chinese regulators began to clamp down on the tech sector, beginning with the scuppering of affiliate Ant Financial’s mega listing late last year. Alibaba itself was hit with a record $2.8 billion fine in April for antimonopoly violations.
The Unisplendour stake is likely to be valued at between 40 billion yuan and 50 billion yuan ($6.2 billion-$7.7 billion), said two of the people. That would represent a premium of 34%-68% to the stock’s average price over the past month of 22.4 yuan, according to Reuters calculations.
Tsinghua Unigroup said in a statement to Reuters that to mitigate debt risks, it had “approached several investors under the guidance of a brought-in special working team”.
“Tsinghua Unigroup will make an overall arrangement for bringing in strategic investors if it enters a judicial restructuring,” it added.
Unisplendour, Alibaba, Wuxi Industry Development Group, Beijing Electronics and JAC Capital did not respond to requests for comment.
(Reporting by Julie Zhu and Josh Horwitz; Additional reporting by Kane Wu; Editing by Sumeet Chatterjee and Edwina Gibbs)