Deals | Alibaba Rumored to Fully Acquire Eleme, Upping Competition with Tencent-backed Meituan-Dianping (Updated)

Alibaba is rumored to pump in US$ 9.5 billion to fully acquire food delivery startup Ele.me.

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Deals | Alibaba Rumored to Fully Acquire Eleme, Upping Competition with Tencent-backed Meituan-Dianping (Updated)

Chinese billionaire Jack Ma is adding another valuable item to the shopping bag of the ecommerce empire he co-founded 19 years ago. Local news service Tencent Tech reported, citing anonymous sources, that Alibaba would be pumping in US$ 9.5 billion to fully acquire food delivery startup Ele.me (饿了么), meaning “are you hungry?” in Mandarin.

Both Alibaba and Ele.me declined to comment.

However, an internal source at Alibaba told 36Kr, a Chinese biztech media and KrASIA’s parent, that “an acquisition (of Ele.me) is slated to happen, but the final price and deal details have yet to determined.” This person, who spoke on condition of anonymity because the matter is sensitive, added that “after the acquisition Ele.me’s business direction will be shifting towards new retail, falling under the wings of Daniel Zhang, chief exec of the group.”

A Meituan internal source once expressed the company’s concerns over Alibaba’s possible acquisition of Ele.me because it means that “we will have to deal with Alibaba directly.”

The Chinese e-commerce conglomerate, together with its financial arm Ant Financial, led a US$ 1 billion round into Ele.me last May. Part of the funding was used to acquire the largest Chinese search engine Baidu’s food delivery operations announced in last August.

According to market researcher Bigdata-Research, Ele.me, Meituan Waimai and Baidu Waimai represented 34.6%, 33.6% and 18.5% of the market share respectively in 2016. The acquisition of Baidu Waimai propelled Ele.me to become the No.1 in Chinese online food ordering and delivery sector. Meituan Waimai’s parent Meituan-Dianping is backed by China’s social networking and gaming giant Tencent.

Both Alibaba and Tencent are tapping into a trend saw more and more affluent Chinese resorting to their smartphones to book meals, get movie tickets and other offline services.

Update: This article has been updated to reflect confirmation from Alibaba internal source and Meituan-Dianping’s sentiment towards the deal.

Writer: Ben Jiang