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Alibaba, Yunfeng to Buy Control of Citic 21CN for $171 Million

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Jan. 24 (Bloomberg) -- Alibaba Group Holding Ltd., the owner of China’s biggest e-commerce business, and Yunfeng Capital said they will buy control of Citic 21CN Co. for HK$1.33 billion ($171 million) to enter the drug-data industry.

Alibaba, through wholly owned Perfect Advance Holding Ltd., has agreed to buy 4.4 billion Citic 21CN shares at 30 Hong Kong cents each, taking a 54.3 percent stake, Citic 21CN said in a filing to Hong Kong stock exchange yesterday evening. Yunfeng, a private equity firm co-founded by Alibaba Chairman Jack Ma, will buy a 29.8 percent stake in Perfect Advance before the share sale is completed, according to the statement.

“The transaction is the foundation for a strategic partnership aiming at jointly driving development of a pharmaceutical-product information platform,” Alibaba said in an e-mailed statement yesterday. The platform will use Citic 21CN’s drug data and Alibaba’s e-commerce, cloud computing and “big data” capabilities, it said.

Alibaba may use the purchase to help it compete against Tencent Holdings Ltd. for China’s 618 million Internet users who spend money online. Tencent earlier this month said it plans to invest HK$1.5 billion for a 9.9 percent stake in a logistics center operator China South City Holdings Ltd.

On completion of the deal, Alibaba will hold 38.1 percent of Citic 21CN and Yunfeng 16.2 percent, Alibaba said. The buyers will seek a waiver from Hong Kong rules that require purchasers of a majority stake in company to make a buyout offer for all outstanding shares, Citic 21CN said.

Citic 21CN mainly engages in system integration, software development and services for drug authentication, tracking and logistics, according to its filing.

Trading in Citic 21CN, suspended since Jan. 16, will resume in Hong Kong today. The stock has gained 48 percent in 2014, including a 43 percent single-day surge on Jan. 6

To contact the reporter on this story: Jasmine Wang in Hong Kong at jwang513@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net

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