The news: Alibaba announced Tuesday that it would divide into six business groups, each with the ability to raise outside funding and go public. It’s the most dramatic restructuring for Alibaba in 25 years, per CNN.
Alibaba’s US-listed shares rose 12% Tuesday in reaction to the news.
Alibaba’s Alphabet moment: Alibaba essentially becomes a holding company, similar to how Google became one component under Alphabet in 2015. The pivot allowed for smaller companies under Alphabet’s purview to become leaner and more accountable.
Six business units emerge: Each of Alibaba's units will be allowed to seek outside capital with an eye toward eventual IPOs. The six groups are:
Why this could succeed: Unleashing six semi-independent companies gives Alibaba the opportunity to pursue growth in diversified businesses.
The restructuring allows jobs to be cut as part of the natural order rather than because businesses are performing poorly.
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