Chinese e-commerce giant Alibaba is planning to take over food delivery platform Ele.me for $9.5 billion. While Alibaba and ele.me have both declined to comment on “market rumors”, an Alibaba executive confirmed this news to the media without disclosing further details.
In August 2016, Chinese e-commerce giant Alibaba and online payment provider Ant Financial jointly invested $1.25 billion in food-delivery platform Ele.me, and in 2017, bought more of its shares. An Ele.me senior executive revealed that Ele.me Founder Zhang Xuhao holds just 2 percent of its shares. Alibaba Group and its subsidiaries owns 32.94 percent of Ele.me as its largest stakeholder.
Yesterday, there were rumors that the buyout is in the works because Ele.me had failed to fulfill a prerequisite. An earlier agreement between the two parties allegedly required Ele.me to become profitable by the end of March 2018. Alibaba issued a statement denying this alleged agreement between the two sides.
News of the potential buyout added another variable to the fiercely competitive food delivery market in China.
The Q4 2017 Chinese Food Delivery Market Report showed that Ele.me, which merged with Baidu Takeout, had 49.8 percent of the market share, and Beijing-based food delivery platform Meituan ranked second in terms of market share. The food delivery market has turned into a competition between Alibaba and Meituan.
Alibaba had continuously purchased more shares of Ele.me in the past. Meituan had completed a $4 billion funding round in October of last year, led by Tencent. After the investment, Meituan was valued at $30 billion.