Alibaba, which already had a 43 per cent stake in Ele.me, acquired all remaining shares in a move that values China’s biggest food delivery company at $9.5 billion.
“This acquisition will deepen Ele.me’s integration into Alibaba’s ecosystem and advance Alibaba’s new retail strategy to provide a seamless online and offline consumer experience in the local services sector,” Alibaba said in a statement, adding it wants to bolt Ele.me together with its listings service Koubei.
Daniel Zhang, Alibaba CEO, said the food delivery app maker can in future “leverage Alibaba’s infrastructure in commerce and find new synergies with Alibaba’s diverse businesses”.
Ele.me will continue to operate under its own brand and work with existing partners and merchants. Wang Lei, VP at Alibaba, will become CEO.
The deal pits Alibaba against rival Tencent in the retail space. The deal comes as Tencent is gearing up its own retail push: it is also a backer of Meituan Dianping, a domestic rival to Ele.me’s rival.
Financial Times reported Ele.me has 3 million couriers covering 1.3 million merchants and was valued at $5.5 billion in its last funding round in 2015.
The report quoted a prediction earlier this year by Jefferies analyst Karen Chan of “an intensifying battle between Tencent and Alibaba for consumers’ digital wallet and data through an array of retail-focused deals”.