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NetEase sells Kaola unit to Alibaba for $2 billion

NetEase sells Kaola unit to Alibaba for $2 billion
FILE PHOTO: The company sign of Alibaba Group Holding Ltd is seen outside its Beijing headquarters in China June 29, 2019. REUTERS/Stringer -
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(Reuters) – Nasdaq-listed gaming giant NetEase Inc <NTES.O> said on Thursday it agreed to sell its Chinese e-commerce business Kaola to Alibaba Group Holding Ltd <BABA.N> for $2 billion (1.6 billion pounds).

The long-rumored acquisition comes as China’s e-commerce players increasingly look to niche segments for growth, as growth in China’s overall online shopping sector slows.

“With Kaola, we will further elevate import service and experience for Chinese consumers through synergies across the Alibaba ecosystem,” Alibaba Chief Executive Officer Daniel Zhang said in a statement.

Kaola specializes in providing overseas goods to Chinese consumers. It primarily purchases goods directly from suppliers before reselling to consumers.

This model stands in contrast to that of Alibaba’s Tmall, which typically requires overseas brands to launch and manage virtual storefronts on the platform.

Alibaba plans to let Kaola continue to operate independently under its current brand, while Tmall import and export general manager Alvin Liu will become Kaola’s new CEO, NetEase said in the statement.

Alibaba and NetEase also agreed for Alibaba, along with private equity firm Yunfeng, to invest approximately $700 million in NetEase Cloud Music.

NetEase, best known as a maker and publisher of games, launched Kaola in 2015.

(Reporting by Ismail Shakil in Bengaluru and Josh Horwitz in Shanghai; Editing by Peter Cooney and Matthew Lewis)

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