Simpson Thacher & Bartlett is representing Alibaba Group Holding on the integration of its Tmall online pharmacy operations into Hong Kong-listed affiliate Alibaba Health Information Technology Limited, which has turned to Freshfields Bruckhaus Deringer for advice.

Under the deal, Alibaba Health will buy 100 percent of the online pharmacy operations from a wholly owned subsidiary of Alibaba Group and another investor for HK$19.45 billion ($2.5 billion). It will issue shares and bonds to fund the purchase, with the shares priced at HK$5.28 each.

Alibaba said there were currently 186 online-licensed pharmacies on its Tmall online marketplace. Gross merchandise value (GMV) of those businesses for the financial year ended March 31, 2015 was approximately 4.74 billion yuan, it said. After the consolidation, consumers will still to be able to access online pharmacies through Tmall.

A Simpson Thacher team led by Hong Kong partners Celia Lam and Leiming Chen is representing Alibaba Group on the deal.

Freshfields’ Hong Kong corporate partner Edward Freeman is advising Alibaba Health.

“We expect that this integration will enable Alibaba Group to build a healthcare ecosystem that can utilise e-commerce, big data and other technologies to improve the healthcare supply chain,” Daniel Zhang, Alibaba Group’s chief operating officer, said in a statement.

The deal, which is subject to approval by independent shareholders of Alibaba Health, is expected to be completed in the third quarter this year.

If approved, the deal would raise Alibaba Group’s effective equity ownership of Alibaba Health to about 53 percent from 38 percent, making it a consolidated subsidiary, Alibaba said.