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.
– 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