Ali Health’s surprise stock recovery raises eyebrows

A week earlier, many analysts were scratching their heads on why a small unit of Alibaba (BABA) became a top stock performer. By May 17, Alibaba Health Information Technology had soared at least 56% in six days, making it one of the healthiest stocks in the world. But then, last Tuesday, the unit announced a $1.4 billion deal to acquire a part of the health-based assets of its parent, the e-commerce giant – raising many eyebrows.

When news of the deal officially broke, the Alibaba unit saw its stock rise 3.8% to about HK$ 7 per share. The deal is also expected to boost Ali Health further, with more pharma-related business flowing back to it from its parent, Alibaba. According to the terms of the deal, Alibaba will have about 67% voting rights in Ali Health.