Alibaba invested US$250 million in Meitu in the form of convertible bonds to explore new opportunities in AI e-commerce

On May 20, Meitu Inc. (stock code: 1357) announced that it had reached a strategic cooperation with Alibaba Network China Co., Ltd. (an indirect wholly-owned subsidiary of Alibaba Group), and issued convertible bonds with a total principal of US$250 million, a term of 3 years, and an annual interest rate of 1%. The initial conversion price was HK$6.00 per share (converted at the agreed exchange rate of US$1 to HK$7.8178). This cooperation is not only financial support, but also indicates that the two parties will carry out in-depth collaboration in e-commerce, AI technology, cloud computing and other fields, injecting new variables into the development of the industry.

1. Details of convertible bond terms: flexible design to balance the interests of both parties

The core terms of this convertible bond reflect the balanced consideration of risks and benefits for both parties:

Conversion rights and conversion scale: Alibaba can convert bonds into Meitu shares at a price of HK$6.00 per share within 5 working days from the date of issuance to the expiration date. If the full amount is converted, a maximum of 335.5 million shares can be obtained, accounting for 7.35% of Meitu's existing share capital and 6.85% of the expanded share capital. This exchange price is 16.4% higher than the average price in the 30 trading days before the announcement and 24% higher than the average price since 2025. It not only reflects Alibaba's recognition of Meitu's value, but also avoids short-term dilution of existing shareholders' equity.

Interest and redemption mechanism: The annual interest rate of the bond is only 1%, which is far lower than the market average. Meitu's annual interest cost is about 2.5 million US dollars, and its financial pressure is relatively light. If a default occurs (such as failure to deliver shares on time, deterioration of financial indicators, etc.), Alibaba has the right to request redemption of the principal and interest of the bond.

Nomination rights are tied to equity: When Alibaba holds more than 5% of the convertible bond principal or equity after conversion, it has the right to nominate one non-executive director to participate deeply in corporate governance.

2. Core areas of strategic cooperation: Deep coupling of AI and e-commerce

In addition to capital injection, the business cooperation agreement between the two parties focuses on three strategic directions:

1. AI tools for e-commerce scenarios

Alibaba will give priority to promoting Meitu's AI e-commerce tools on platforms such as Taobao and Tmall. For example, "Meitu Design Studio" has served more than 2 million merchants, generating product pictures, short videos and other content through AI to reduce merchants' marketing costs. The two parties will also jointly develop data-driven "e-commerce raw picture and video tools", such as intelligent scenario-based content generation for categories such as clothing and beauty, to improve product conversion rates. 70% of Meitu's monthly active users are women, which highly overlaps with Alibaba's core customer base for e-commerce. The cooperation is expected to attract more young consumers.

2. AI technology and computing power collaboration

Alibaba Cloud will provide Meitu with the cloud computing resources required for AI model training to meet its computing power needs in areas such as image generation and video processing. At the same time, the two parties will jointly develop basic technologies such as video generation models, image generation models, and multimodal models, and explore applications in scenarios such as e-commerce marketing and user data analysis. Meitu promises to purchase cloud services worth no less than RMB 560 million from Alibaba Cloud in the next three years, forming a closed loop of "technology-computing power-scenario".

3. Equity structure and long-term binding

After the transaction is completed, Alibaba will become an important shareholder of Meitu, holding 6.85% (after full conversion). This equity binding lays the foundation for the long-term cooperation between the two parties in supply chain, user traffic, technology research and development, etc. It is worth noting that if Alibaba's shareholding ratio is less than 5%, the business cooperation agreement will be automatically terminated, further strengthening the stability of strategic synergy.

III. Industry impact: "breakthrough" signal of AI e-commerce track

For Meitu, the US$250 million fund will significantly enhance its AI R&D investment capabilities. In recent years, Meitu has made frequent moves in the field of AI, launching tools such as AI avatars and AI visual design, but overseas market expansion and large model training require continuous financial support. This financing provides a buffer space for it to explore business models such as "AI tools + subscription system" and "pay-per-use".

For Alibaba, cooperation with Meitu is a key layout for its response to content e-commerce competition. Facing the impact of platforms such as Douyin and Pinduoduo, Alibaba needs to strengthen its integration capabilities of "content + e-commerce". Meitu's AI generation technology can help merchants quickly produce high-quality content, make up for the shortcomings of Taobao and Tmall in the UGC/PGC content ecology, and increase user stay time and conversion rate.

From the industry level, this cooperation marks the deepening of the collaborative model of "Internet giants + vertical AI companies". Through the three-wheel drive of "capital + technology + scenario", the two parties are expected to set new benchmarks in the fields of AI e-commerce, smart marketing, etc., and provide the industry with a "traffic-technology-monetization" cooperation model.

The cooperation between Alibaba and Meitu is not only a two-way choice at the capital level, but also a deep resonance between AI technology and e-commerce scenarios. With the gradual implementation of convertible bond terms and the deepening of business collaboration, this cross-border linkage of "technology + consumption" may redefine the content production paradigm of the e-commerce industry and open up new imagination space for industry growth.