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JD.com to Invest $800 Million in Chinese Delivery Specialist Dada Nexus

China's e-commerce titan JD.com (NASDAQ: JD) is opening its wallet to grab a stake in a complementary business. JD.com has agreed to invest $800 million in newly issued ordinary shares in Chinese on-demand delivery company Dada Nexus (NASDAQ: DADA), the companies announced in a joint press release. By doing so, JD.com will gain a bare majority (51%) in Dada when the new investment is piled atop its existing holding in the company.

Once the deal goes through, JD.com should be committed for some time to that majority position -- it has agreed not to sell or otherwise dispose of the shares it's purchasing for a period of six months after closing.

A JD.com delivery man making the rounds in the city of Wuhan.

Image source: JD.com.

Lei Xu, CEO of its JD Retail business, said, "Our increased investment will facilitate both sides to promote the expansion of on-demand retail and delivery, as well as omni-channel collaboration."

"This will help us to further diversify our retail services, to enable our partners, especially, real economy enterprises, to continue to optimize cost, efficiency and experience and accelerate their intelligent digital transformation, and to deliver faster, better and richer services for consumers," he added.

This isn't JD.com's only big move in the logistics sphere recently. Last month it divulged that it is spinning off its JD Logistics unit on the Hong Kong Stock Exchange. Previously, in August of last year, it announced it was bulking up that unit with the purchase of a controlling stake in outside logistics company Kuayue-Express Group.

The stay-in-place measures engendered by the coronavirus pandemic, which first spread widely in China, have heightened the need for (and the value of) logistics operations. It seems that with its latest Dada deal, JD.com is expanding and consolidating its position in this critical segment.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends JD.com. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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