China's Alibaba plans to acquire a stake of up to 9.99% in Swiss duty free group Dufry, Dufry said on Monday, as it announced a new Chinese joint venture with the tech giant.

“Alibaba Group and Dufry AG (Dufry) have agreed to enter into a collaboration to jointly explore and invest in opportunities in China to develop the travel retail business and to enhance Dufry’s digital transformation,” Dufry said in a statement.

The Swiss firm has reeled under the hit of Covid-19 and plans to ask shareholders on Oct. 6 to fund a buyout of its Hudson Ltd unit via a new rights issue.

It said Alibaba’s commitment meant it now hoped to bring in proceeds of 700 million Swiss francs ($763 million) through the rights issue, up from 500 million francs previously.

Dufry in August agreed to buy the rest of Hudson for $7.70 per share in an all-cash deal worth around $311 million that will delist Hudson from the New York Stock Exchange.
Private equity group Advent International will could get a stake of nearly a fifth in Dufry through the rights issue, providing up to 415 million francs.

Dufry on Monday said the proceeds of the rights issue would be used to finance both the Hudson deal, as well as general corporate purposes, which could now include financing the setup and operations of the joint venture with Alibaba.

Alibaba will have a 51% stake in the joint venture, while Dufry will hold the rest. Along with pursuing growth opportunities in China, the joint venture will seek to help Dufry grow business in online travel retail, the Swiss group said.