In a $1.4 Billion deal, Chinese e-commerce Company Alibaba Group Holding Ltd will invest few of its pharmacy assets in to a listed healthcare unit, said the firm in a statement made on May 29.
Ali JK Nutritional Products Ltd, the company which uses Alibaba’s Tmall platform to sell medical products, healthcare devices, adult products etc will be bought by Alibaba Health Information Technology Ltd.
With this deal, Alibaba will now have new shares in Ali Health, which will take firm’s total shares from 48.1% to 56.2% in the healthcare company. The deal will also earn Alibaba a 67.5% voting share in Ali Health.
The deal will surely give a boost to Ali Health’s business and will help the company to grow faster in the healthcare industry as compared to other firms in the market like Ping An Healthcare and Tencent Holdings-backed WeDoctor.
Alibaba’s CEO Daniel Zhang referred to healthcare as “strategically important” business zone for the firm. He said that the deal would prove itself as a “logical evolution” in Alibaba Health’s development. He also said that the deal will help Ali Heath to become country’s “best healthcare ecosystem”.
According to consultancy McKinsey & Co, the deal will help Chinese healthcare expenditure reach $1 trillion mark by the year 2020, rising from $357 Billion in 2011, with huge technology firms ready to enter the rapidly growing private healthcare industry.
Ali Health mentioned in a statement that, after injecting of the business unit, Ali Health produced a gross stock of almost 20.56 billion Yuan ($3.21 billion) in the fiscal year to March 31 and had more than 3,300 related dealers.
Alibaba said that the deal is waiting for an approval of the transaction by shareholders of Ali Health and Hong Kong stock exchange.
