Suning to buy TTK Express to boost its logistics capability

A Suning delivery vehicle on the job, transporting packages in Beijing. [Photo by Feng Yongbin/China Daily]

Suning Commerce Group Co Ltd's logistics subsidiary plans to spend 4.25 billion yuan ($611.03 million) buying Hangzhou-based TTK Express, aiming to expand its logistics business and cover more clients.

The Nanjing-based retail giant announced on Monday that its unit Jiangsu Suning Logistics Co Ltd would pay 2.975 billion yuan to initially buy a 70 percent stake in TTK Express.

After the acquisition of the 70 percent stake, Suning said it would buy the remaining 30 percent for 1.275 billion yuan within 12 months.

The company said that after the acquisition of TTK Express, it will offer expanded logistics capabilities, reduce operating costs and build an open logistics platform to expand its businesses.

Suning Logistics mainly serves its parent company's retail business, but is also moving into different areas. After Alibaba acquired shares from Suning and became its second largest shareholder in 2015, Suning Logistics also took orders from Alibaba's logistics arm, Cainiao Network.

At present, Suning Logistics provides warehousing and distribution services for more than 1,000 companies nationwide.

Analyst said efficiency and operational gains from the acquisition mean the company will be able to improve and enhance its overall logistics systems, cover more clients and sharpen its competitiveness.

"The trade is a win-win for both companies. TTK was chosen for its growing logistics operations ability," said Zhang Qingjie, senior analyst at Beijing-based internet consultancy Analysys.

"Suning aims to provide better logistics services for its customers and then become more competitive."

Established in 2010, TTK Express is a new growing force in the logistics industry.

With 61 distribution centers and more than 10,000 delivery points in China, the company was expected to deliver 1.26 billion packages nationwide in 2016.

Its annual revenue in 2015 grew by 50.6 percent from 2014, larger than the average growth rate 28.8 percent of top domestic express firms, including STO Express, YTO Express and Yunda Express.

Suning Logistics said in the future it would focus on direct operation of its key delivery points.