BEST Inc (NYSE: BEST) stock price rallied 40.28% after selling its Chinese business for an enterprise value of 6.8 billion renminbi, equivalent to $1.06 billion.
The firm did not sell any of its other businesses operating in China except for its express delivery service, which was sold to J&T Enterprise for the above amount.
The company retained its Freight, Supply Chain Management, Global and Ucargo businesses.
The total amount paid for the business is lower than the overall figure due to certain conditions and adjustments. Still, BEST currently expects to receive $600 million in cash for the business.
BEST is a Chinese logistics firm founded in 2007 and is backed by Chinese e-commerce and tech giant Alibaba.
Johnny Chou, BEST Inc’s CEO, said: “In light of the unexpected ongoing challenges from COVID-19 and evolving industry dynamics, we believe this transaction allows us to better capitalize on our strengths by focusing on supply chain-based logistics solutions.”
The disposal of its express delivery business will leave the company in a solid financial position to grow its other businesses, given the global logistics industry’s multiple challenges due to the coronavirus pandemic’s impact.
Best announced its partnership with Alibaba’s logistics arm, Cainiao Smart Logistics Network, to ship products from mainland China to Vietnam, Thailand and Cambodia in August this year.
The logistics company’s Q1 results fell short of analysts expectations due to the multiple challenges faced by the firm but were better than expected, driven by its November 2020 strategic refocusing plan.
*This is not investment advice.
BEST stock price.
Best stock price rallied 40.28% premarket to trade at $2.96, rising from Thursday’s closing price of $2.11.