Alibaba is preparing to merge its food delivery businesses in a bid to grab further market share in China’s fiercely competitive meals-on-demand market, sources told Reuters.
Platforms Ele.me and Koubei, both run by the e-commerce giant, will combine and launch a new fundraising round, the sources said. Alibaba hopes to raise between $3 billion and $5 billion, earning a valuation of up to $25 million for the new business.
Alibaba is currently locked in a battle with social media and gaming giant Tencent, whose yellow-clad Meituan delivery unit offers similar online-to-offline services via immensely popular mobile apps.
“Alibaba and Meituan are the two main companies that can offer comprehensive O2O services,” technology consultant Mo Jia told Reuters. “Alibaba’s three units are complementary to each other and it has strategic logic to merge them into one platform to compete with Meituan.”
Investors leading the fundraising are expected to be SoftBank’s Vision Fund and possible private equity firm Primavera Capital, two sources said.