Alibaba signs $1.4 billion affiliate deal to get into the medical market
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Alibaba signs $1.4 billion affiliate deal to get into the medical market

Chinese Ecommerce giant Alibaba has signed a new deal that, it hopes, will forward its ambitions in the medical retail world. The company will sell assets (ranging from drugs to medical devices) to a Hong Kong-listed affiliate which will become its flagship healthcare arm.

It revealed the news on Tuesday, saying it would “inject a plethora of businesses” into Alibaba Health Information Technology Ltd., in exchange for $1.4 billion of new stock in the venture. This will give Alibaba a suitable home for things like its Tmall pharmacy, and it will retain 67.5% voting rights.

Alibaba’s share price is up 13% over the last 30 days

graph 3105 alibaba

SOURCE: Yahoo Finance

Alibaba is making a strong play for the state-dominated Chinese healthcare sector. It’s aiming to “transform an outmoded model with data and cloud computing”. This market is worth around 4.6 trillion yuan (about $720 billion, at current exchange rates), and is just one of many disparate areas that Alibaba has been focusing on.

Daniel Zhang, the company’s CEO, made the following comment in a statement: “Healthcare is a strategically important area for Alibaba Group with strong growth potential. This transaction is a logical evolution for the continued development of Alibaba Health into our healthcare flagship platform.”

The deal, which will see Alibaba own 56.2% economic interest and 67.5% voting interest, is still subject to the approval of independent Alibaba Health shareholders and the Hong Kong Stock Exchange.

Disclosure

Dominion holds Alibaba in its Global Trends Ecommerce Fund.


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