Alibaba turns its focus on health-care business as China rethinks health-related reforms. (Photo : Reuters)
Leading e-commerce giant and innovator Alibaba Group Holding Ltd. decided to shift its online-pharmacy business, Tmall, to its publicly traded health-care institution through a deal worth $2.51 billion as it delves and turns its attention to the sector.
In exchange for convertible debt and shares, Tmall will be transferred from its marketplace platform to the Alibaba Health Information Technology Ltd., which is listed under the Hong Kong Stock Exchange.
The move will bring Alibaba Health's stake to around 55 percent when converted completely.
According to Alibaba, it would treat its health-care arm as a consolidated subsidiary. Alibaba Health, meanwhile, stated that it would pay HK$ 19.45 billion worth of debt and shares.
The agreement is expected to be completed by the third quarter of 2015. Alibaba currently holds a 38-percent stake in the health-care institution.
The shift is part of the e-commerce giant's plans to be a prime group in the country's medical industry. Should the government's reforms on health-care system allow, Alibaba revealed that its health-care arm will sell prescription pharmaceuticals.
According to the company, Tmall sells medical devices, contact lenses and over-the-counter medicines, among others. The gross merchandise value of the platform is worth $763 million as of March 31.
Alibaba Health stated that it would give a 20-percent discount to its parent company as it would issue its shares only at a price of HK$5.28, instead of HK$6.68. On the other hand, the debt has a HK$5.808 conversion price per share.
The price comes after the health-care arm and the Alibaba Group negotiated basing from the trading status a month before the halt. This is on top of Alibaba Group being the controller of all its businesses.
The company remarked that trading in Alibaba Health's shares will resume on April 22, Wednesday.
