Alibaba Health in $1.73 billion deal for some Alibaba marketing services

(Reuters) -Alibaba Health Information Technology said on Tuesday it had struck a HK$13.51 billion ($1.73 billion) deal to get the rights to certain services of Alibaba’s marketing tool, a move it expects to improve its revenue and services to online stores.

Alibaba Health said it would buy AJK Technology Holding Ltd from Taobao Holding Limited for a combination of cash and shares.

Taobao is a unit of Alibaba Group Holding, the tech conglomerate that also ultimately controls Alibaba Health.

Alibaba Health said the deal would give it the rights to some services offered via Alibaba’s digital marketing tool Alimama to online merchants of healthcare products, such as verifying the qualifications of merchants’ marketing materials.

The deal will improve Alibaba Health’s revenue growth and profitability outlook, while allowing it to provide better services to online stores, the company said in a filing to the Hong Kong stock exchange.

Alimama will pay fees for the services that are set to be operated under Alibaba Health after the transaction.

Alibaba Health would issue 2.56 billion shares at HK$4.50 apiece and pay the U.S. dollar equivalent of HK$2 billion in cash to Taobao Holding.

Completion of the deal is subject to approvals from independent shareholders and the stock exchange.

($1 = 7.7957 Hong Kong dollars)

(Reporting by John Biju in Bengaluru and Roxanne Liu in Beijing; Editing by Shilpi Majumdar and Mark Potter)