E-commerce group Alibaba confirmed on Sunday it will wholly acquire Ele.me, a China-based food delivery service in which the corporate already owns stock, valuing the business at $9.5bn.
The deal was first reported in February and will include Alibaba purchasing the shares of Ele.me’s current stakeholders, which include internet groups Tencent and Baidu and e-commerce firm JD.com.
Alibaba and its financial services affiliate Ant Financial already own approximately 43% in Ele.me between them.
Ele.me operates a food delivery service that dominates the Chinese market with a 49.8% share, according to Bloomberg. The service will continue to function under its current name but will combine some features with Alibaba’s local commerce platform, Koubei.
Wang Lei, vice-president of Alibaba, will become chief executive of Ele.me following the transaction, with Ele.me’s current chief executive Xuhao Zhang becoming chairman and serving as special advisor to Alibaba CEO Daniel Zhang on new retail strategy.
Ele.me reportedly obtained $1bn in funding from Alibaba in May 2017 at a valuation of $5.5bn to 6bn, boosting Ele.me’s total equity to approximately $3.35bn.
In August 2017, Ele.me agreed to acquire Baidu’s online food ordering platform, Xiaodu, for $800m, which reportedly gave Baidu a stake in Ele.me.
The company’s shareholders include Dianping, the restaurant listings service that subsequently became a part of local services platform Meituan-Dianping, which invested $80m in 2014, after Matrix Partners, Sequoia Capital and GSR Ventures had supplied $25m in 2013.
Dianping returned in February 2015 to support a $350m series E in 2015 that also featured Tencent, JD.com, Sequoia and Citic PE, followed by a $630m series F round in August 2015 backed by Tencent, JD.com, Sequoia, Citic, retail group Hualian, China Media Capital and Gopher Asset.
Alibaba and Ant Financial injected $1.25bn in 2016 at a $4.5bn valuation. Alibaba provided $900m of the capital while Ant Financial put up the remaining $350m.
Daniel Zhang said: “We are excited for Ele.me to become a part of the Alibaba ecosystem. Under the leadership of its founder and management team, Ele.me has achieved leading market share in China’s online food delivery and local services sector.
“Our shared belief that new retail will create more value for customers and merchants has brought us together. Looking forward, Ele.me can leverage Alibaba’s infrastructure in commerce and find new synergies with Alibaba’s diverse businesses to add further momentum to the new retail initiative.”