J&T Express Acquires Best Inc.’s Express Delivery Business in China for $1.1 Billion
J&T Express and BEST Inc. reached an agreement on Friday to acquire the latter’s express delivery business in China at a price of $1.1 billion. The sale does not include any of BEST’s other businesses, namely, supply chain management, freight, ucargo and global.
LatePost‘s report today said that this transaction is expected to be completed in the first half of 2022 and will see BEST receive a cash sum of $600 million. After the transaction is completed, Johnny Chou, Founder, Chairman and Chief Executive Officer of BEST, will quit the board of directors of BEST’s courier subsidiary in China.
“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,” said Zhou.
In April this year, J&T Express completed a financing round worth $1.8 billion led by Boyu Capital and followed by Hillhouse Capital and Sequoia Capital. The financing round pushed the company to a $7.8 billion valuation. At present, the number of its daily orders is between 20 million and 22 million.
According to this year’s second quarter financial report for Best Inc., the number of its daily orders was about 25 million. A person close to the transaction said to LatePost that the combined daily order volume of the two parties is about 46 million.
Best Inc., which is listed in the US, has seen a downturn in recent years. The company’s share price has dropped from $4.33 at the time of IPO to $2.10, putting the current value of the company at $816 million. The express delivery business in China, which accounts for nearly 60% of Best Inc.’s revenue, has been declining in recent years. In the second quarter of this year, Best’s losses expanded to 466 million yuan, but Best sold its biggest source of losses for $1.1 billion.
A person close to the transaction said that J&T Express took a liking to BEST’s resources and talent pool. On the one hand, J&T Express has many outlets in the low-end market, while Best has a lot more representation in first-and second-tier cities. On the other hand, J&T Express, who is exploring markets in the Middle East and Latin America, needs the support of BEST’s experienced team.
According to iiMedia data, in January 2021, the market shares of several express delivery firms like SF, Yunda, YTO, STO, BEST and J&T were 10.64%, 16.33%, 14.94%, 9.93%, 10.2% and 8% respectively. The acquisition of Best’s domestic express delivery business by J&T Express may affect the pattern of express delivery industry.
After the COVID-19 pandemic in 2020, a price war broke out again in the domestic express delivery industry, a battle that has seriously affected the income of couriers.
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In order to protect the legitimate rights and interests of couriers in the industry, seven Chinese departments jointly issued an announcement in July of this year. In August, many express delivery firms announced that the distribution fee would increase by 10 cents per order. However, people in the industry believe that without ending the price war, couriers’ incomes will not be improved.