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

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

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. (241) for HK$1.33 billion ($171 million) to enter the drug-data industry.

Alibaba, through wholly owned Perfect Advanced 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 today. 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 today. 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 tomorrow. 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

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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