Alibaba injects online pharmacy business into HK-listed unit
Alibaba Group plans to inject the operations of its online pharmacy business into Alibaba Health Information Technology (Alibaba Health), a Hong Kong-listed healthcare company that it bought alongside Yungfeng Capital last year, in a deal worth HK$19.4 billion ($2.5 billion).
According to a filing, Alibaba Health will issue a combination of shares and convertible bonds to acquire the online drug selling platform on Alibaba's B2C TMall e-commerce platform, with the shares priced at HK$5.28 apiece.
Upon completion of the deal, Alibaba's stake in the Hong Kong-listed company will increase from 38% to 53%. Alibaba Health will become a consolidated subsidiary of Alibaba with the exclusive rights to operate an online pharmacy on Tmall.
Alibaba said there are currently 186 online-licensed pharmacies selling over-the-counter drugs, medical devices, contact lenses, sexual health products and other general healthcare products on Tmall. As of the end of March, the gross merchandise value (GMV) of those businesses was approximately RMB4.74 billion ($764 million).
"Healthcare will be a strategically important growth area for our ecosystem in the years to come, and we have a strong competitive advantage in this area," Daniel Zhang, COO of Alibaba Group, said in a statement. "We expect that this integration will enable Alibaba Group to build a healthcare ecosystem that can utilize e-commerce, big data and other technologies to improve the healthcare supply chain and ultimately provide users with a better healthcare experience."
The transaction is expected to be completed in the third quarter of this year.
Yunfeng Capital and Alibaba Group together bought 54.3% stake in pharmaceutical data provider CITIC 21CN, a Hong Kong-listed subsidiary of Chinese conglomerate CITIC Group, for HK$1.33 billion last year. The firm then rebranded as Alibaba Health.
Last week, Alibaba announced plans to inject its online movie ticketing and movie production crowdfunding businesses into Alibaba Pictures Group. Alibaba Pictures was created when Alibaba bought 60% of Hong Kong-listed ChinaVision Media Group - in which rival Tencent Holding and VC firm Sequoia Capital were investors - in March last year.
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