SHANGHAI-HEADQUARTERED food delivery service provider Ele.me has merged with Baidu’s food and beverage delivery service Baidu Waimai, according to a local media report yesterday.
The deal is valued at around US$500 million and is funded by a combination of cash and equity, the 21 Century Business Herald reported, citing unnamed sources close to the matter.
Both Baidu and Ele.me declined to comment.
The possible merger could be another step in the ongoing battle between Internet giants Alibaba and Tencent.
Ele.me is backed by Alibaba and its financial service affiliate Ant Financial and local service unit Koubei, while Tencent backs Meituan Dianping, another major food delivery company.
Internet consultancy iResearch said in a report that the online-to-offline market size is expected to surge 76 percent from a year ago to 978 billion yuan (US$144 billion) by the end of 2017.
By the end of last year, Ele.me and Baidu Waimai were ranked as the first and third largest food delivery apps in China, with 36.5 percent and 17.3 percent market share respectively while Meituan Dianping came in second with 33 percent share, according to BigData-Research.
Internet giants also view food delivery as a key starting point in the booming online-to-offline service sector, which helps them to connect Internet users not only with online vendors but also offline merchants and service providers.