Alibaba prices $3.2 billion convertible notes offering

Alibaba Group Holding Limited (NYSE: BABA) announced the pricing of approximately $3.2 billion in zero coupon convertible senior notes due 2032. The offering is expected to close on September 16, 2025, subject to customary closing conditions.

The company will allocate net proceeds of approximately $3.13 billion for general corporate purposes, with 80% directed toward enhancing cloud infrastructure capabilities including data centers and technology upgrades. The remaining 20% will support international commerce business operations expansion.

The notes carry an initial conversion rate of 5.1773 American Depositary Shares per $1,000 principal amount, equivalent to a conversion price of $193.15 per ADS. This represents a 31.25% premium over the reference share price of $147.16 per ADS.

Alibaba entered into capped call option transactions costing approximately $183.74 million to reduce potential dilution from note conversions. The cap price is set at $235.46 per ADS, representing a 60% premium to the Hong Kong Stock Exchange closing price on the pricing date.

Holders may convert notes only under specific conditions before March 15, 2032, after which conversion is permitted at any time until maturity. The company retains discretion to settle conversions in cash, ADSs, or a combination of both.

The notes may be redeemed by Alibaba under certain circumstances, including after September 20, 2030, if ADS prices reach at least 130% of the conversion price for specified trading periods. Holders have the right to require repurchase on September 15, 2030, or following certain fundamental changes.

The securities are being offered to non-U.S. persons in offshore transactions under Regulation S and have not been registered under U.S. securities laws.

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