Chinese ecommerce giant Alibaba said it will acquire all outstanding shares in Shanghai-based Ele.me, the leading online delivery food delivery platform in China.
Alibaba and its affiliate Ant Financial currently own a combined 43 percent of Ele.me, and the latest deal will value the food delivery startup at $9.5 billion, Alibaba said in a statement on Monday, according to a Sina news report.
In 2016 and 2017, Alibaba invested twice in Ele.me at a combined $2.25 billion.
“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,” said Alibaba’s CEO Daniel Zhang in the statement.
Wang Lei, a vice president of Alibaba, will become the CEO of Ele.me, while its founder Zhang Xuhao will step down and serve as a special advisor to Alibaba’s CEO on New Retail strategy.
The heavily promoted New Retail initiative refers to the integration of online and offline experiences for consumers, which aims to break the lines between ecommerce and brick-and-mortar shops and promote the future retailing experience.
The brand “Ele.me” in Chinese is roughly translated as “Are you hungry?” in Chinese, and is one of the two most popular online food delivery platforms in the country, along with Tencent-backed Meituan.
In August 2017, Baidu confirmed it sold its food delivery arm Baidu Waimai to Ele.me, without disclosing its stake in the startup. Several local reports suggested that the merger was valued between $500 million and $800 million, funded by a combination of cash and equity.
Last year, Ele.me and Baidu Waimai owned a combined 50.6 percent of shares in the 200 billion yuan market while Meituan owned 41.8 percent, leaving less than 10 percent in shares to the remaining smaller players.
Local research said the Chinese food delivery market exceeded 200 billion yuan ($31.8 billion) in terms of sales value last year, and is expected to further expand to 243 billion yuan in 2018, up more than 20 percent year on year.
Also, the number of people using smartphones to place food orders exceeded 300 million in 2017, and is expected to reach 355 million this year.
PREVIOUS AND RELATED COVERAGE
Uber sells Southeast Asia business to Grab
Grab has acquired Uber’s operations in Southeast Asia in the largest acquisition by an internet company in the region.
Alibaba sets up AI research facility with Singapore university
Jointly launched by the Chinese tech giant and Singapore’s Nanyang Technological University, the “multimillion-dollar” research institute will focus on applying artificial intelligence for home, retail, community, and urban transportation.
Tencent sees 2017 profit climb 75 percent on robust ad sales
Chinese tech giant’s online advertising revenue grew 49.9 percent for its fiscal 2017, which saw its profit grow to US$11.09 billion on overall revenue hitting US$36.39 billion.
Korean food-tech firm Woowa Brothers developing delivery robot
Woowa Brothers, a South Korean food-tech firm that runs the popular Baedal Minjok delivery app, is developing a delivery robot that will help staff the expanding food delivery industry.
Alibaba, JD.com heat up offline-online competition in China
Country’s two biggest e-commerce players are ramping up investments in physical assets and partnerships, as they look to meld offline and online technologies to transform retail experience.
Alibaba’s Q3 cloud revenue up 104 percent, hits $2.2 billion annual run rate
Alibaba is using the Amazon Web Services playbook well in China.
Walmart testing fully-automated store with no cashiers or checkouts (TechRepublic)
Computer vision will aid the initiative, dubbed Project Kepler, which is similar to the Amazon Go concept in Seattle.