Alibaba lands US$250 million convertible bonds deal, AI pact with selfie app giant Meitu

Chinese photo-editing app operator Meitu saw its shares in Hong Kong rise to a seven-year high on Wednesday, following the announcement of its strategic partnership with Alibaba Group Holding and the issuance of US$250 million in convertible bonds to a subsidiary of the e-commerce giant.

After trading hours on Tuesday, Alibaba.com China conditionally agreed to subscribe to the convertible bonds for a term of three years, “at an initial conversion price of HK$6 per conversion share”, according to Meitu’s filing. Alibaba owns the South China Morning Post.

Headquartered in Xiamen, a city in southern Fujian province, Meitu said its strategic collaboration would cover areas such as e-commerce, artificial intelligence (AI) technology and cloud computing capabilities.

Shares of Meitu surged 18.98 per cent to close at HK$7.02 on Wednesday, the highest the stock has reached since 2018. Meanwhile, Alibaba’s shares closed up 1.15 per cent to HK$123.10.

Meitu also committed to buy at least 560 million yuan (US$77.6 million) worth of cloud computing services from Alibaba over the next three years. Cloud computing enables enterprises to manage or distribute over the internet a range of software and other digital resources as an on-demand service, like electricity from a power grid.

The strategic collaboration is expected to serve as “the foundation of a long-term partnership” between Meitu and Alibaba, according to the filing. The partnership will also allow Meitu “to seize the opportunities brought by AI, driving the company’s long-term growth”.