In Major Overhaul, Alibaba Says Will Split Into 6 Units

Alibaba Group Holding Ltd said it plans split its business into six main units covering e-commerce, media and the cloud, adding that each of the units will explore fundraising or initial public offerings.

Alibaba’s U.S.-listed shares rose 7% in pre-market trading.

Here are comments from analysts:

Stuart Cole, Head Macro Economist At Equiti Capital, London

“I am not sure how quickly Alibaba could be broken up. I am sure they have done some work on this before announcing it, but it seems quite a large job to create six companies out of one. But it does inject an element of flexibility and adaptability into the company, which currently is something of a behemoth.

“And it will allow the more successful of the six new companies to potentially raise finance more easily and cheaply than the parent company can, as they will not be burdened by the slower, less profitable parts of the business. So for investors, they get the opportunity to put their funds in the parts they like whilst avoiding the parts they do not, unlike the current situation.

“It does seem something of a coincidence that this is happening just as Jack Ma seems comfortable returning. To me, it suggests something that Alibaba has been wanting to do for some time, but has been waiting for the opportunity to do so.”

Kenny NG, Strategist At China Everbright Securities, Hong Kong

“It releases additional value. With this expectation, investors will be more positive on Alibaba. It may reflect a new round of development for the business and reduce worries of regulatory issues.”

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)