Key HighlightsChinese tech giant Alibaba has reached an agreement to divest its gaming division Lingxi Games to Trustar Capital in a transaction valued at more than $2 billionCEO Zhou Bingshu confirmed the transaction through an internal company memorandum, noting that existing leadership will continue operating the businessThis divestiture aligns with Alibaba’s strategic realignment to focus resources on artificial intelligence and cloud computing initiativesThe gaming studio’s flagship title is “Three Kingdoms: Strategy Edition,” a collaborative project with Japanese developer Koei TecmoSince Q4 2024, Alibaba has divested more than $4.6 billion worth of non-essential business units, including retail chains Sun Art and IntimeChinese technology conglomerate Alibaba Group has finalized arrangements to transfer ownership of its gaming subsidiary Lingxi Games to Asia-based private equity player Trustar Capital in a transaction exceeding $2 billion, according to an individual with direct knowledge of the agreement. Separate reporting from Bloomberg placed the deal’s minimum value at $1.5 billion, referencing different sources.Shares of Alibaba (BABA) advanced 1.92% following the announcement.Alibaba Group Holding Limited, BABAIn a company-wide communication distributed Monday to Lingxi employees, CEO Zhou Bingshu verified that a definitive agreement had been executed following multiple negotiation phases. Zhou indicated that both he and the current leadership structure would continue their roles following the ownership transition.Trustar Capital, previously operating under the name CITIC Capital, specializes in private equity investments across Asian markets. Zhou characterized the firm as possessing both the sector knowledge and operational capabilities necessary to facilitate Lingxi’s continued expansion.The internal communication did not specify the precise transaction amount, anticipated completion timeframe, or any regulatory prerequisites tied to the deal.Representatives from Lingxi, Alibaba, and Trustar declined to provide statements when contacted by Reuters.Strategic Portfolio RationalizationThis transaction represents a continuation of the strategic direction Alibaba has pursued since the latter part of 2024. The corporation previously divested its ownership positions in Sun Art and Intime for an aggregate $2.6 billion, transactions that Chairman Joe Tsai and CEO Eddie Wu characterized as elements of a comprehensive portfolio optimization initiative.According to two individuals with knowledge of the situation, Alibaba had been discreetly pursuing potential acquirers for Lingxi for an extended period. Plans to conduct a capital raising round in late 2023 were postponed after Chinese authorities introduced proposals for stricter gaming sector regulations, one source disclosed.The gaming unit underwent leadership changes during 2024. Zhou, who oversaw development of “Three Kingdoms: Strategy Edition,” assumed the CEO position following founder Zhan Zhonghui’s exit.Whether Alibaba will maintain any business relationships with Lingxi post-transaction—such as cloud infrastructure provision or distribution agreements—remains undetermined.About Lingxi GamesHeadquartered in Guangzhou, Lingxi has built its reputation primarily on “Three Kingdoms: Strategy Edition,” a multiplayer mobile strategy title developed in partnership with Japanese gaming company Koei Tecmo, creator of renowned franchises including “Romance of the Three Kingdoms” and “Nobunaga’s Ambition.”Alibaba’s strategic shift parallels a comparable action taken by ByteDance in recent months, which divested its Moonton gaming studio. Both technology companies have significantly increased their commitments to AI development, with their respective ChatGPT-equivalent platforms achieving top usage rankings among Chinese AI applications.No information regarding the transaction’s completion schedule or regulatory approval requirements has been made public at this time.The post Alibaba (BABA) Offloads Lingxi Gaming Division to Trustar Capital in $2B+ Transaction appeared first on Blockonomi.