Alibaba Group Holding, the mainland e-commerce firm, is injecting its Tmall online pharmacy operation into Hong Kong-listed Alibaba Health
This move will help Alibaba Group Holding to consolidate its health-care enterprise and ride a boom in online health-related business. This announcement doubled value of Alibaba Health (0241.HK), it was traded at HK$13.5 on 15 April, the first day of its resumption of trading after being suspended on 20 March.
Alibaba Health will issue shares and bonds to fund the purchase of 100% online pharmacy operation from Alibaba Group’s Tmall, a B-to-C e-commerce platform in mainland. The deal will be completed in the Q3 on 2015, then rise Alibaba Group’s effective equity ownership of Alibaba Health to 53 percent.
Mainland e-commerce firm Alibaba Group Holding is injecting its online pharmacy operations into a Hong Kong-listed affiliate in a HK$19.45 billion deal to consolidate its health-care enterprise and ride a boom in online health-related business.
Shares in the affiliate, Alibaba Health Information Technology (0241), nearly doubled early yesterday after the announcement on a resumption of trading after being suspended since March 20.
Alibaba Health will buy 100 percent of the online pharmacy operations from a wholly owned subsidiary of Alibaba Group and another investor. It will issue shares and bonds to fund the purchase, with the shares priced at HK$5.28 each.
“We expect that this integration will enable Alibaba Group to build a health-care ecosystem that can utilize e-commerce, big data and other technologies to improve the health-care supply chain,” Alibaba Group chief operating officer Daniel Zhang said.
Online pharmacies are currently limited to selling over-the-counter medicines and health-care products such as cough remedies and vitamin tablets, but China is gearing up to open the prescription drug market to online pharmacy operators.
The deal is expected to be completed in the third quarter on 2015, raising Alibaba Group’s effective equity ownership of Alibaba Health to about 53 percent from 38 percent and making it a consolidated subsidiary.
Competitors with Alibaba such as Tencent Holdings (0700.HK), JD.com and Baidu have all made moves to get into China’s online health-care market, seen as a potential cure for a fragmented and opaque market controlled by state-run distributors and hospitals.
Source: The Standard Finance