Simpson Thacher & Bartlett and Freshfields Bruckhaus Deringer are leading the $2.5 billion sale of Alibaba Group Holding Ltd.'s online pharmacy to its Hong Kong-listed healthcare subsidiary.

Alibaba Health Information Technology Ltd. is offering a combination of equity and debt to purchase Beijing Chuanyun Logistics Investment Ltd., which sells over-the-counter medicine and related products on Alibaba Group's Amazon.com-like Tmall ecommerce site. The increased equity will give Alibaba Group a 55 percent share of Alibaba Health, up from 38 percent, once the deal is completed in the third quarter.

Alibaba Health Information Technology was known as Citic 21CN Co. until last August, when Alibaba changed its name. In January 2014, Alibaba invested $171 million in Hong Kong-listed Citic 21CN, a company that conducts software development, logistics and data tracking for the pharmaceutical industry. The investment was a move to capitalize on changes in regulation that have prompted growth in China's healthcare system.