Chinese e-commerce giant Alibaba Group Holding Ltd said second of April it would buy the remaining shares of Ele.me, a major platform in China’s food delivery market, according to Reuters.
Alibaba and affiliate Ant Small & Micro Financial Services Group Co Ltd currently own approximately 43 percent of Ele.me, and the latest deal will value the startup at $9.5 billion, says Alibaba in a statement.
Ele.me, which roughly translates as “Hungry?”, is part of a fast-growing and competitive e-commerce market in China driven by consumers eager to use smartphones to make purchases from groceries to cinema tickets. For Alibaba, the latest acquisition enlarges the e-commerce firm’s food delivery empire, which also includes delivery platform Koubei, as it competes with Meituan Dianping, backed by Tencent Holdings Ltd.
Alibaba and Meituan are both investing heavily in offline services, including deliveries, mobile payments and unstaffed stores, to tap a wider area as China’s online commerce market shows signs of slowing.
Ele.me will continue to operate under its own brand following the acquisition, says Alibaba, but will combine some functionalities with Koubei.
As part of the deal Alibaba will install Alibaba Vice President Wang Lei as chief executive at Ele.me, while the current chief executive and founder of Ele.me will become chairman and serve as a special advisor to Alibaba on new retail strategies.
Jack Ma's Alibaba has been pouring money into brick-and-mortar operations as well as online startups. Alibaba is now accelerating its efforts to lead the delivery market by taking full control of Chinese startup Ele.me.
- We are excited for Ele.me to become a part of the Alibaba ecosystem, says Daniel Zhang, CEO of Alibaba Group. - Under the leadership of its founder and management team, Ele.me has achieved leading market share in China’s online food delivery and local services sector. Our shared belief that New Retail will create more value for customers and merchants has brought us together. Looking forward, Ele.me can leverage Alibaba’s infrastructure in commerce and find new synergies with Alibaba’s diverse businesses to add further momentum to the New Retail initiative.
Ele.me also complements Koubei, Alibaba’s affiliated local services platform and provides extended synergies. By combining Ele.me’s online home delivery services with Koubei’s consumer acquisition and engagement capability for a range of restaurants and service establishments, Alibaba will be able to offer an integrated experience to consumers both online and offline, declares the Chinese retail conglomerate.
