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Alibaba to form e-commerce JV with MegaFon, Mail.Ru, Russian state fund

Alibaba Group Holding Ltd. will form an e-commerce joint venture in Russia under a strategic partnership with mobile operator MegaFon, internet company Mail.ru Group Ltd. and Russian Direct Investment Fund, the Russian government's sovereign wealth fund.

As part of the deal, Alibaba will contribute its AliExpress Russia business, composed of online retail service AliExpress and business-to-consumer marketplace Tmall, to the joint venture. The Chinese e-commerce giant will also infuse cash and other resources into the venture, in which it will retain a 48% stake, according to a Sept. 11 statement.

MegaFon will swap its 10% stake in Mail.ru for a 24% stake in AliExpress Russia. Mail.ru, meanwhile, will contribute its Pandao e-commerce business, cash and distribution product integrations in exchange for a 15% holding in AliExpress Russia. The RDIF will acquire a 13% holding in AliExpress Russia by investing new capital and acquiring additional shares in the joint venture from Alibaba.

The transaction, financial details of which were not disclosed, is expected to be completed in the first quarter of 2019, subject to customary closing conditions and respective corporate approvals from the joint venture partners.

Also under the deal, AliExpress Russia and Mail.ru will work together on traffic and product initiatives, as well as in investing into another business in areas such as food technology.

Earlier reports said Alibaba's joint venture deal in Russia is considered a replacement for its failed deal with PAO Sberbank of Russia. The Jack Ma-led company was eventually reported to be in talks with VTB Bank PJSC for a supposed joint venture, to help the latter compete with Sberbank.

Alibaba launched Tmall in Russia in September 2017.