Ali Health Drops After Regulators Review Merger With Parent

Alibaba Health Information Technology Ltd. dropped in Hong Kong trading after its parent said it wasn’t required to make a general offer for shares of the health unit even though regulators had found some breach of rules in the conditions of their original merger.

Ali Health fell as much as 11 percent before trading 5.7 percent lower at HK$5.29 at 9:52 a.m. in Hong Kong. The city’s Takeovers & Mergers Panel ruled on April 23 in a non-disciplinary review of Alibaba Group Holding Ltd.’s investment into Citic 21CN Co. in 2014, which was renamed Alibaba Health, the parent company said in a filing Monday.

The panel found that Alibaba breached Rule 25 of the Hong Kong Code on Takeovers & Mergers, the company said without specifying what the violation had been. The panel ruled that the breach invalidated a previous waiver that had removed the need for a general offer. The panel then decided that Alibaba didn’t need to make such an offer because of the health unit’s share gains since the deal, according to the filing.

"Alibaba Group believes that the determination by the Panel will not affect Alibaba Health’s operations and it intends that Alibaba Health will continue to be the flagship healthcare subsidiary of Alibaba Group," the company said in the filing.

The takeover panel couldn’t immediately be reached for comment. Alibaba Group said is evaluating a possible judicial appeal against the panel’s finding as it believes that it has fully complied with the takeovers Code in making its investment in Ali Health.

— With assistance by Hui Li

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