Alibaba injects pharmacy assets into healthcare unit in $1.4 bln deal

Ping An Healthcare and Technology Co

29/05/2018 03:43

SHANGHAI, May 29 (Reuters) - Chinese e-commerce giant
Alibaba Group Holding Ltd  BABA.N  will inject some of its
online pharmacy business into a listed unit in a deal valued at
HK$10.6 billion ($1.35 billion), the firm said in a statement on
Tuesday.
    Alibaba Health Information Technology Ltd  0241.HK  will buy
Ali JK Nutritional Products Holding Limited, which controls
sales of medical devices, healthcare products, adult products
and healthcare services on Alibaba's Tmall platform.
    The deal will see parent Alibaba receive newly issued shares
in Ali Health, taking its economic interest in the firm to 56.2
percent from 48.1 percent currently. Alibaba will also have a
67.5 percent voting interest in Ali Health after the deal.
    The deal should bolster business for Ali Health amid a
broader push into a fast-growing healthcare technology market by
other firms in China, such as Tencent Holdings-backed  0700.HK 
WeDoctor and recently listed Ping An Healthcare  1833.HK .
    Alibaba CEO Daniel Zhang said in a statement that healthcare
was a "strategically important" business area for the firm and
that the deal would help turn Ali Health into the country's
"best healthcare ecosystem".
    Ali Health's CEO added that the deal would help the firm
expand by adding new categories to its offering.
    Chinese healthcare spending is set to hit $1 trillion by
2020, up from $357 billion in 2011, according to consultancy
McKinsey & Co, with technology firms increasingly looking to
break into a growing private healthcare market.
    The business unit being injected into Ali Health generated a
gross merchandise volume of around 20.56 billion yuan ($3.21
billion) in the financial year to March 31 and had over 3,300
related merchants, Ali Health said in a statement.
    Alibaba said the deal was subject to approval from Ali
Health shareholders and the Hong Kong stock exchange.
 ($1 = 7.8451 Hong Kong dollars)
 ($1 = 6.4065 Chinese yuan)

 (Reporting by Adam Jourdan; Editing by Himani Sarkar)
 ((adam.jourdan@thomsonreuters.com; +86 21 6104 1778; Reuters
Messaging: adam.jourdan.thomsonreuters.com@reuters.net))