HONG KONG, June 22 (Reuters Breakingviews) - Alibaba (9988.HK) may be the simple solution to Suning.com’s (002024.SZ) mounting debt problems. The e-commerce giant’s 20% stake in the embattled Chinese retailer has plunged by two-thirds in value since it bought it in 2015. The shares have further to fall as Suning faces billions of debt due. Given Alibaba’s push into bricks-and-mortar commerce, a takeover could benefit both sides.

Suning’s financial pain is partly self-inflicted. As one of China’s biggest electronics retailers, the $8 billion company led by Zhang Jindong went on an aggressive buying spree in recent years, snapping up Carrefour’s (CARR.PA) Chinese business as well as football clubs Inter Milan and a now-defunct local team. In 2017, Zhang even led a consortium to invest in embattled property developer Evergrande (3333.HK) .

The retailer is now grappling with $7 billion of debt due within a year. To complicate matters, affiliated entities that are controlled by Zhang and hold stakes in Shenzhen-listed Suning have pledged the stock for loans, as has the founder himself. One unit, which is 50% owned by Zhang, has $1.8 billion in debt outstanding, according to Dealogic. The company’s shares were halted last week, after a Beijing court froze a quarter of Zhang’s shares in response to a lender demanding early repayment of a loan.

With Suning shares down by more than a quarter this year and margin calls coming in, Zhang is seeking outside help. In February, he unveiled plans to sell a 23% stake, worth $2.2 billion, to funds backed by the Shenzhen government. Earlier this month, his home province provided what was effectively a one-year $493 million loan to Suning.

Yet his white knight is hiding in plain sight. In 2015, Alibaba paid $4.6 billion for a one-fifth stake in Suning. At the time, the online shopping goliath touted “synergies in e-commerce, logistics and incremental business though joint omni-channel initiatives”. Key to that is Suning’s vast network of over 2,600 stores, distribution centres and last-mile delivery stations.

Since shedding its asset-light strategy, the $572 billion Alibaba is no stranger to physical shops and logistics. In addition to Suning, the web giant also owns stakes in supermarket operator Sun Art Retail (6808.HK) , home improvement and furniture chains Easyhome New Retail (000785.SZ) and Red Star Macalline (601828.SS) , and more. In 2017, it even took department store InTime private – a possible template for Suning. Zhang need only to let go.

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CONTEXT NEWS

- Shares of Shenzhen-listed Chinese retailer Suning.com were halted on June 16. The company cited a major business announcement to be made about transferring the company’s shares in the near future.

- The Beijing Second Intermediate Court froze 540 million of Suning's shares owned by controlling shareholder Zhang Jindong, or 5.8% of the company's total, for three years, after one of the creditors filed for legal enforcement, Suning said in a Shenzhen stock exchange filing on June 15.