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Alibaba Sweeps Up Shares of Retailer Zulily, Now Holds 9.2 Percent Stake

Alibaba is not looking to acquire Zulily outright, sources say.

Asa Mathat

Chinese e-commerce giant Alibaba Group Holding Ltd. has reached a 9.2 percent stake in U.S. on-line retailer Zulily Inc., after sweeping up shares at rock-bottom prices last week.

On Friday, Alibaba finished a three-day buying binge and now holds 11.5 million shares of Zulily, a site that hosts “flash” sales of clothing primarily for women and children, according to a U.S. Securities and Exchange Commission filing posted late on Friday.

After spiking in February 2014 to $73.50, Zulily shares have fallen sharply, and closed on Friday at $13.30. Shares hit a record low of $9.09 on Wednesday, the first day of Alibaba’s acquisitions, as brokerages slashed price targets for the company on a disappointing first-quarter report.

Before the week’s buys, Alibaba held just under 7 million Zulily shares, the filing showed.

The Wall Street Journal, which first reported the investments, quoted a person familiar with the matter as saying Alibaba was not looking to acquire Zulily outright. Zulily’s chief executive officer, Darrell Cavens, said his company had a lot of respect for Alibaba and welcomed it as a shareholder.

While Zulily goes head-to-head with other flash sales sites such as Rue La La, it has said it expects to compete increasingly with Alibaba and the other major shopping platform, Amazon.

The Journal said the drop in Zulily’s shares this year of more than 40 percent was largely because of reports of sharply decelerating sales growth and difficulty holding on to customers.

(Reporting by Lisa Lambert; Editing by Peter Cooney)

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