China-based e-commerce firm Alibaba confirmed on Friday that it is merging online food delivery subsidiary Ele.me with its local services spinoff Koubei with funding from telecommunications and internet group SoftBank.
The corporate had previously revealed that it is joining SoftBank to provide about $3bn of funding for the newly formed but still unnamed entity, which will compete with Meituan Dianping.
Alibaba had already invested $1bn in Ele.me when it acquired the rest of the company in an April 2018 deal that valued it at $9.5bn. It had launched Koubei in tandem with its financial services affiliate Ant Financial three years before.
Koubei raised $1.1bn at an $8.8bn valuation in a January 2017 round co-led by CDH Investments, Primavera Capital and Silver Lake and Yunfeng Capital that included Singapore state-owned Temasek and Malaysian government-owned Khazanah Nasional.
The newly merged company will cover about 3.5 million merchants spanning more than 670 Chinese cities according to South China Morning Post, and will utilise Alibaba’s expertise in areas such as new retail technology, membership, marketing, logistics and finance.
Wang Lei, Ele.me’s chief executive, will hold the same position at the combined company, while Koubei CEO Fan Chi will continue to manage Koubei while reporting to Lei.
Alibaba CEO Daniel Zhang Yong said: “The goal of the local service company is not only for the food market, but to take on the bigger mission to redefine urban life and to make it better and more convenient.”
