JD Logistics Inc. plans to buy Chinese logistics firm Deppon Logistics Co. as the delivery arm of China e-commerce giant JD.com seeks to boost its network infrastructure in the world’s second largest economy.

JD Logistics agreed to pay about 9 billion yuan (US$1.42 billion) for Deppon Holdco, an investment vehicle that holds about 66.5 percent in Shanghai-listed Deppon Logistics, according to a statement to Hong Kong stock exchange Sunday. As part of the deal, JD Logistics will launch mandatory general offer for all of Deppon shares at 13.15 yuan (US$1.9) a piece, a 3.9 percent premium to the latest closing price, as required under Chinese rules.

The purchase price was determined by factors including Deppon’s earnings, its stock market performance and that of its peers as well as the long term strategic benefits of the transaction, according to the statement. JD Logistics plans to finance the acquisition with own funds and financing.

Chinese companies including JD.com have been investing heavily in warehouses and logistics infrastructure as the coronavirus pandemic accelerated the shift to e-commerce. Last year, the tech giant’s infrastructure management unit JD Property agreed to buy a controlling stake in China Logistics Property Holdings Co. in a deal valuing the firm at about HK$16.4 billion (US$2.1 billion).

Deppon offers a integrated logistics services including less-than-truckload transportation, full truck load transport, delivery services and warehousing management, according to the statement. As of June 2021, it counted more than 30,000 service stations across China, 143 transfer centers with more than 1.8 million square meters, and more than 15,000 vehicles.(SD-Agencies)