Baidu Takeout will be Sold

4 min read 

After months of seesaw battle, the fate of Baidu Takeout may soon be decided, mostly likely to be taken over by ele.me.

Currently, ele.me official responds that they have no comment on it, and Baidu has ambivalent attitude without responding clearly.

According to what a core high-ranking figure told touchweb, Baidu Takeout ever negotiated with S.F. Express and Meituan Takeout respectively. Especially the S.F. Express, it even sent Baidu Takeout -away letter of investment intent, but still failed to reach the final deal. This is mainly due to the conflicting demands between Baidu and S.F. Express.

For Baidu, especially since Qi Lu took over as the President and COO of Baidu group, the direction of transforming to AI has been clear. Baidu wants to shake off the take-away function and find a partner to move forward easily.

For S.F. Express, it has little meaning for a courier company to acquire Baidu Takeout, which has led to the idea of joint venture funded by both companies by the ratio of 5 to 5.

Baidu Takeout ever contacted with Meituan Takeout, but the latter thinks Baidu’s market share is limited and the acquisition doesn’t have too much sense. Therefore, there is no meaningful negotiation between Baidu Takeout and Meituan Takeout.

Ele.me’s purchase of Baidu Takeout will be an event of big idea. However, Baidu will not sell its Baidu Takeout at highest valuation of $2.4 billion, nor the $500 million as the rumor goes.

If it’s $500 million, Baidu’s investors won’t agree. While if it is $2.4 billion, no company would be willing to pay such a high price for it.

Baidu Takeout is part of Baidu’s carrier plan. Baidu launched its carrier plan in July 2015, opening Baidu’s high-quality asset programs to investors. As one of the major projects in the first batch, Baidu Takeout financed $250 million in A round.

In July 2016, in the teleconference after the release of Baidu Q1 financial report, Baidu made it clear that the new round of financing for Baidu Takeout had ended. The value assessment reached $2.4 billion, and investors were Baidu and other investment institutions.

A core high-ranking figure of takeout industry told touchweb the sale price of Baidu Takeout was between $0.5 billion and $1 billion. As Baidu has abundant cash flow, its desire for recycling funds is not strong. Therefore, this acquisition is mainly carried out through the exchange of shares and cash.

The benefits of this approach are that Baidu Takeout’s A round investors at least will not have too much loss and Baidu can also become a minority shareholder of the new takeout company, without spending too much energies while guaranteeing its interests.

A high-ranking figure of Baidu Takeout told touchweb that the contract had not yet been signed, and that everything could be in doubt as long as there was no sign of the agreement.

Why is it complicated to sell Baidu Takeout? The reason is that whether Baidu Takeout chooses Meituan or ele.me, a lot of strategic investors are behind it.

For example, behind Meituan’s Takeout are Tencent and Meituan and behind ele.me are Alibaba and other shareholders.

Notably, Alibaba and Ant Financial Services Group increased their shares of ele.me in April 2017 after their investment in ele.me of $1.25 billion in March 2016. Thus, their total investment is $400 million.

Of that, Alibaba invested $288 million and the remaining $112 million was funded by Ant Financial Services Group.

By the time when Alibaba released its annual report, Alibaba holds about 23% of ele.me sharing. Thus, Ali company’s stake of ele.me is 32.94%, which has already replaced ele.me management team as the biggest shareholder of ele.me.

Earlier, Xing Wang, Meituan CEO, said Ali spent a billion dollars a year to support ele.me. fundamentally, it is decided by which company could provide better services for consumers, or even if an investment of one billion dollars, its market share still will fall.

Meituan Takeout and ele.me put numerous advertisements in buildings in July 2017.

According to insiders, Meituan Takeout and ele.me put numerous advertisements in buildings in July 2017. They try to compete for the preference of white-collar. It reflects how intense and fierce competition is in the market.

Analysts pointed out that once Baidu Take-out were acquired by ele.me, in the early stage, Baidu Take-out may maintain independent operation, but later, like Didi and Uber, Youku and Tudou, Baidu Take-out will continue to be weakened and even to disappear.

 

This article originally appeared in touchweb and was translated by Pandaily.

Click here to read the original Chinese article.

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