Two of China’s largest private companies, online listings and reviews service Dianping and group buying platform Meituan, agreed today to a merger that Xinhua reported would be worth $15bn.
The deal will go ahead through the formation of a new company that will combine the two, which have jointly raised more than $2.6bn from investors including internet portal Tencent, e-commerce group Alibaba, conglomerates Wanda and Fosun, and smartphone maker Xiaomi.
Founded in 2003 as a restaurant reviews website, Dianping subsequently grew into a more all-encompassing local listings service before expanding to incorporate services including group buying, online payment, restaurant reservations and food delivery.
Dianping had raised more than $1.5bn, according to official statements and press reports, most recently securing $850m at a $4bn valuation in April this year from Tencent, which had reportedly already invested $500m in February 2014, Xiaomi, Wanda, Fosun, Temasek Holdings and FountainVest Partners.
Other investors in Dianping include Trust Bridge Partners, Sequoia Capital, Qiming Venture Partners and Lightspeed Venture Partners.
Meituan was founded in 2010 and was the first China-based company to make a splash in the group buying sector. It covers a range of goods and services including restaurant reservations, food ordering, cinema tickets, and hotels and tourism.
The company had raised almost $1.1bn in total, including $700m in a January 2015 series D round reportedly featuring Hillhouse Capital and Fidelity Management and Research that valued it at $7bn.
Reports in July stated Meituan, also backed by Alibaba, General Atlantic, Sequoia Capital, Northern Light Venture Capital and Walden International, planned to follow the series D round with a $1bn fundraise that would value it at $15bn, but clearly those plans were not consummated.
Dianping chief executive Zhang Tao and Meituan chief executive Wang Xing will act as co-chairmen and co-CEOs of the new company, which is yet to be named. Both companies will maintain their individual brands and will continue to operate independently, but will look to cooperate strategically as they move forward.
Wang Xing said: “Meituan is very happy to enter into this strategic cooperation with Dianping. It enables us to focus on better serving our consumers and merchants, and allows us to concentrate on developing new businesses and driving product innovation.”
Zhang Tao added: “In addition, it also allows both companies to better leverage our respective advantages in order to accelerate product innovation, deepen service offerings, and speed up industry expansion.
“It will create more value for our consumers and merchants, foster a better [online-to-offline] ecosystem, and facilitate broader industry development.”