Ele.me acquires waimai.baidu for $800m

Source:Global Times Published: 2017/8/24 18:48:40

Shanghai-based online food-ordering platform ele.me announced on Thursday that it has acquired competitor waimai.baidu, with the merged group set to pursue a dual-brand strategy to target different markets, according to a statement ele.me sent to the Global Times on Thursday. 

The deal is valued at $800 million, including a $300 million price tag for bringing in consumers via waimai.baidu's parent company Baidu Inc, news website caixin.com reported on Thursday, citing internal sources. 

Baidu will become a shareholder of ele.com following the acquisition, said the statement. 

After the deal, there will be no change in the brand or staff of waimai.baidu, said the statement, citing Zhang Xuhao, CEO of ele.me. "Waimai.baidu will still focus on the high-end market and explore quality service, a totally different strategy from that of ele.me," Zhang was quoted as saying in a report by Beijing Business Today newspaper on Thursday.

Wamai.baidu's artificial intelligence (AI) sector will not be closed because both two sides need such technology support in the future, said the report. 

China's takeout industry is large but the penetration rate is still very low, highlighting the importance of cooperation. Considering that, ele.me will establish another headquarters in Beijing, in addition to its Shanghai office, according to Zhang.

For Baidu, the deal is "a scaling-down of its online-to-offline business to allow the tech giant to focus on its AI strategy," caixin.com quoted experts as saying. 

Given that strategy, waimai.baidu has been up for sale since the second half of 2016, and the platform contacted SF Express and meituan.com, another food ordering start-up, for potential offers but failed to reach any agreement. 

This time, Alibaba Group Holding is a big push for the acquisition as the group looks to merge its three takeout brands - ele.me. waimai.baidu and Koubei - to compete with Tencent-backed meituan.com, said caixin.com, predicting that the turf war will intensify. Alibaba has provided financing support for the deal, according to the statement. 

In the first half of 2017, ele.me led the takeout industry with 41.7 percent of the market. Meituan.com and waimai.baidu had shares of 41 percent and 13.2 percent, separately, according to a report released by consulting firm iiMedia Data.

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