Alibaba (NYSE:BABA) shares soared more than 14% on Tuesday as the company announced plans to split into six main parts, including e-commerce, media and cloud computing, all of which may seek to raise funds or go public.
The company’s CEO, Daniel Zhang, will lead the cloud intelligence division, while former international retail chief Jiang Fan will head up the digital business unit. Trudy Dai is reportedly going to lead the main Taobao Tmall online shopping division.
The other units include local services, its Cainiao logistics group and digital media and entertainment.
In a statement, Zhang said Alibaba (BABA) is welcoming a new opportunity for growth.
“The market is the best litmus test, and each business group and company can pursue independent fundraising and IPOs when they are ready,” Zhang added.
Following the news, Wall Street analysts praised the plan, including Barclays analyst Jiong Shao, who said the decision is “a significant step towards shareholder value creation.”
“We had been hoping Alibaba would spin off certain highly valuable [subsidiaries],” Shao explained. “But this master plan to split the company into six units may be even better.”
In addition, Seeking Alpha contributor Jonathan Weber called Alibaba’s (BABA) plans “a bombshell” and said it may also reduce future regulatory risks.
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