Daniel Zhang, Chief Executive Officer, Alibaba Group. Photo credit: World Economic Forum / Manuel Lopez, licensed under Creative Commons

Chinese technology giant Alibaba has reached a deal to gobble up a stake of up to 10% in Dufry, a Swiss duty-free retail powerhouse. Under a deal between both parties, Dufry will issue up to 25 million new shares that’ll sell for an aggregate price of CHF 700 million ($763 million). Alibaba has the option to buy up all the newly issued shares but may not certainly do so, leaving room for other investors to also participate in the round. Dufry is raising the new capital to bolster its operations amid a coronavirus pandemic that has widely affected its retail business. 

As part of a broader partnership, Alibaba and Dufry have also agreed to form a retail joint venture that’ll serve the Chinese market. For the joint venture, Alibaba brings to the table a well-established retail network while Dufry brings a strong travel retail business that’s already present in China. The venture is targeted at bolstering Dufry’s e-commerce and digital transformation, with Alibaba holding a 51% stake while Dufry holds 49%.

Dufry says it’ll make use of Alibaba’s proposed investment to finance a $311 million deal to acquire the remaining equity interest it doesn’t hold in Hudson Ltd, one of its publicly-traded retail units. The investment deal follows a recent one secured by Dufry, where Advent International Corporation, a US-based private equity firm agreed to invest as much as 455 million Swiss Francs ($496 million) in the company. 

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