Alibaba sets up subsidiary involving Ele.me and Koubei to fight Meituan

Further to our report on the merger between Ele.me and Koubei, Alibaba, in the wake of its mixed quarterly results, announced Thursday in its earnings statement to set up a new subsidiary that will ma

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Further to our report on the merger between Ele.me and Koubei, Alibaba, in the wake of its mixed quarterly results, announced Thursday in its earnings statement to set up a new subsidiary that will mainly contain the business of Ele.me and Koubei, with a US$3b capital injection and more to raise from new investors.

This news comes at a time when close archrival Meituan, a Chinese O2O major platform, is going for a potential September 20 public float at the Hong Kong Exchange (HKEx) to fund its loss-making business.

Takeaways

– Both Alibaba and Meituan are vying for a $1.3 trillion food delivery and on-demend services sector.

– By the merger, Alibaba is trying to pose a more serious and ferocious threat for Tencent-backed Meituan-Dianping which is currently seeking for a Hong Kong float.

– Currently Meituan is the market leader for food delivery in China and Alibaba has been playing a catchup game by heavily subsidizing its operations.

Editor: Ben Jiang