In a surprising move, Chinese e-commerce giant Alibaba has abandoned plans for an initial public offering (IPO) of its logistics arm, Cainiao. Instead, Alibaba is offering to buy the remaining 36% of Cainiao that it doesn't already own, for a total of up to $3.75 billion.

This decision comes amidst a larger restructuring for Alibaba. The company recently split into six separate units and installed a new CEO. Alibaba chairman Joe Tsai cited the "strategic importance" of Cainiao to Alibaba's core business, along with the long-term potential for global logistics growth, as reasons for the buyback. Tsai also emphasized that regulatory issues played no role in the decision.

The cancellation of the Cainiao IPO is likely due to a combination of factors. The Hong Kong IPO market has slowed down significantly in recent years, and Alibaba may have faced a mismatch in valuation expectations with potential investors. Additionally, Alibaba's core e-commerce business has seen its market share challenged by competitors like Pinduoduo.

This move suggests a renewed focus on Alibaba's core businesses, particularly e-commerce. By integrating Cainiao more closely, Alibaba aims to regain market share and drive future growth. The buyback is expected to be completed by June or July.