Earlier today, Bloomberg revealed that Chinese e-commerce giants Alibaba are on the verge of completing their acquisition of Chinese telecommunications company ZTE’s software unit, in a deal valued at around USD 294 million. Negotiations had been ongoing for several months, with a tentative resolution seemingly reached on Monday.
Alibaba is optimistic that the deal will provide them with the necessary edge over their rivals in the cloud computing market in Asia and worldwide.
Ever since becoming one of China’s biggest conglomerates following the boom in online retail in the region, Alibaba has been investing heavily in order to expand its cloud computing division. With the aim of competing with the world’s largest cloud service providers like Amazon and Microsoft, Alibaba’s capture of ZTE’s software unit could prove vital in furthering their interests in this space.
As for ZTE, the sale would go a long way in repairing the financial damages inflicted following the record USD 1.2 billion sanction issued against them earlier in the year by the US government for violating regulations on technology exports.
Both parties declined to comment when quizzed on the takeover, but anonymous sources close to the deal indicate that it could be finalized before the end of the current week.