Photo: CFP

Leading fashion e-commerce platforms mogujie.com and meilishuo.com on Monday announced a merger that will create a new company worth nearly $3 billion.

The two websites will operate separately after the merger, said a press release mogujie.com sent to the Global Times on Monday. Mogujie.com CEO Chen Qi will become CEO of the new company, and he has the "full support" of meilishuo.com CEO Xu Yirong, the release said.

Xu's post-merger role was not mentioned in the press release.

The Internet sector in China saw several high-profile mergers in 2015. However, in previous mergers, such as that of restaurant rating website Dianping and group-buying site Meituan, the new companies usually had co-CEOs at the initial stage. One executive would leave the position later in those cases.

Zhang Yi, CEO of market consultancy iiMedia Research, said that having co-CEOs could reassure employees on both sides, but the market has become used to seeing just one CEO in a post-merger company.

HIGO, the cross-border e-commerce platform under meilishuo.com, was not included in the merger, and that could be Xu's future focus, media reports said Monday.

Tencent Holdings, a major investor of meilishuo.com, has increased its investment in the new company, according to the press release.

"The capital market is in a 'hard winter'and venture capital firms are reluctant to invest in two firms with similar business models," Zhang told the Global Times Monday.

"The e-commerce sector is now dominated by giants like Alibaba Group Holding and JD.com Inc, so a merger could make life easier for smaller websites," Mo Daiqing, an analyst at the China e-Business Research Center, told the Global Times Monday.

Mogujie.com and meilishuo.com, founded in 2011 and 2009 respectively, started as shopping guide websites that directed buyers to merchants on Alibaba's e-commerce platform taobao.com.

The two started to build their own e-commerce websites in 2013, targeting fashionable young women. Each site now has more than 100 million registered users, according to the press release.

"This differentiated business strategy has been why mogujie.com-like websites can survive the competition from e-commerce giants," Zhang noted.

But it's too soon to say that the new entity will dominate its target market. For example, chuchujie.com has similar positioning, according to Mo.

Media reports said Monday that the new company may pursue an IPO in the next two years.

"It's possible," said Zhang, noting that as China is promoting a registration-based IPO system, the threshold for Internet firms to get listed could be lowered.

But mogujie.com told the Global Times Monday that there is still no timetable for an IPO.