Alibaba Group has offered to buy the 36% of Cainiao it does not already own for up to $3.75 billion, abandoning plans for an initial public offering (IPO) of the logistics business in Hong Kong.

In the Chinese e-commerce giant’s latest reversal of its restructuring plan, Alibaba, which holds a stake of around 64% in Cainiao, said it was offering to acquire the remaining stock.

Alibaba Group’s decision to buy out Cainiao instead of proceeding with an IPO is a strategic pivot that reflects the current market sentiment and the company’s long-term vision. The offer to purchase the remaining 36% stake for up to $3.75 billion underscores the value Alibaba places on Cainiao’s role in its ecosystem, particularly in enhancing its e-commerce and logistics capabilities.

The move away from an IPO, especially in a tepid Hong Kong market that saw a significant drop in activity last year, suggests a calculated avoidance of potential undervaluation amid market uncertainties. This is further evidenced by the reported mismatch in valuation expectations with potential investors. Alibaba’s valuation of Cainiao at $10.3 billion, while offering $0.62 per share to minority shareholders, indicates a premium on the logistics firm’s worth, possibly reflecting its integral part in Alibaba’s strategy to regain e-commerce market share and drive growth.

Alibaba’s tumultuous year, marked by a major restructuring and leadership changes, seems to be stabilizing with a renewed focus on core businesses. The integration with Cainiao is poised to bolster Alibaba’s e-commerce platform against fierce competition from rivals like Pinduoduo. For investors, this consolidation could signal a stronger, more streamlined Alibaba that is doubling down on its competitive advantages in a challenging market environment.

In essence, Alibaba’s latest maneuvers may be seen as a defensive yet optimistic play, ensuring control over key assets while preparing for a market rebound. Investors should monitor how this buyout impacts Alibaba’s operational synergy with Cainiao and whether it translates into the desired market share gains and revenue growth.