Image Source: Visual China

BEIJING, March 11 (TMTPOST) —Chinese logistic company Deppon Logistics (603056.SH) said in an announcement on Friday that JD Logistics (2618.HK) will acquire 66.49% of its stake, which will make JD Logistics the biggest shareholder of the company.

Deppon Logistics said in the announcement that it will delist from the stock market after the deal is completed.

JD Logistics’ parent company JD.com said in an announcement that JD Logistics and Deppon Logistics will continue to operate independently and that their business operation and strategy will remain unchanged. JD Logistics and Deppon Logistics will establish cooperation in logistic services, cross-border logistics, warehouse and supply chain, etc.

Deppon Logistics has been experiencing a decline in its main logistic business while struggling to expand its business. JD.com’s board chair Liu Qiangdong and Deppon Logistics’ board chair Cui Weixing had reportedly negotiated a potential acquisition deal in 2017 but failed to reach an agreement on a price offer.

This is not the first time for JD Logistics to acquire shares from its rivals. In 2020, JD Logistics acquired Kuayue Express at 3 billion yuan. In late February 2022, the company acquired a controlling stake in on-demand delivery service provider Dada Nexus (Nasdaq: DADA).

China"s logistics industry is experiencing consoliation, with big companies acquring small ones. For instance, SF Express has acquired DHL’s supply chain business in China and Kerry Logistics. Chinese e-commerce giant Alibaba Group’s logistics arm Cainiao has also purchased a stake in STO Express, YTO Express, ZTO Express, Best Express and Yunda Express. Multinational logistics companies such as FedEx, UPS and DHL became logistic giants through acquisitions and mergers.

Industry experts have estimated that logistics companies such as Best Express and STO Express that primarily provides express service might be acquired in the future as well.