Chinese logistics services providers Best Inc and J&T Express announced today that the former will sell its express business in China to J&T Express for $1.1 billion.
The sale in cash is currently expected to close in the first quarter of 2022, according to a news release. The sale does not include any of Best Inc's other businesses, namely, supply chain management, freight and others.
Best Inc will receive a payment of $600 million at first, and after the deal is finished, Johnny Chou, founder, chairman and CEO of Best Inc, will quitted the board of the company’s China business unit.
“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 and providing integrated supply chain, freight and global logistics services to our customers,” he said.
“At the same time, it will enhance our balance sheet and provide a better pathway to profitability.”
J&T Express’ market share is expected to hit 14% after the deal, making it the fourth place after ZTO Express, Yunda Express and YTO Express. Other companies, which are competing in this sector, include JD Logistics and S.F. Express.
The market value of Best Inc has plummeted from $4.33 billion at its IPO in 2017 to $820 million on October 28, according to a news report by tech media Late Post.
Best Inc has rich resources in first and second-tier cities in China, and a large team of talents, which may be the attractions to J&T Express, said the report.