Alibaba fully acquires food delivery platform Ele.me in $9.5b deal

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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.

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