Alibaba to Buy Chinese Food Delivery Giant Ele.me for USD9.5 Billion
Guan Jian
/SOURCE : Yicai
Alibaba to Buy Chinese Food Delivery Giant Ele.me for USD9.5 Billion

(Yicai Global) Feb. 27 -- Ele.me investor Alibaba Group will acquire the rest of China's biggest online food delivery startup, an insider close to the matter told Yicai Global. The deal, which is possibly worth USD9.5 billion, has not yet been made public.

Hangzhou-based Alibaba and its payments affiliate Ant Financial Services Group already own a 40 percent stake in the operator of the Ele.me app, Shanghai Rajax Information Technology Co. The remainder will be bought from investors that include tech giant Baidu Inc. 

Literally meaning 'Are you hungry?,' Ele.me has a network that covers several hundred cities and would form another plank in Alibaba's strategy for New Retail, a term Chairman Jack Ma coined in 2016 to describe "the integration of online, offline, logistics and data across a single value chain." Ele.me's acquisition would turn the e-commerce giant into a major player in the meal delivery sector, only rivaled by Meituan-Dianping, which is backed by Tencent Holdings Ltd.

Alibaba integrated local commerce platform Koubei into its group at the start of the year under the guidance of Zhang Yong, the New Retail division's chief executive. It has become one of four core components in the group's New Retail framework. The other three are: apparel (Tmall, InTime department stores and others); home appliances (Tmall's electronics website and Suning brick-and-mortar stores); and groceries and fast-moving consumer goods (Hema fresh produce outlets, Tmall convenience stores and Exfresh B2B fresh produce delivery).

After a USD1 billion investment in Ele.me last year, Alibaba made it clear that the platform would focus on home deliveries, while Koubei prioritizes customer referrals to shops and restaurants. Their market positionings will remain unchanged after the acquisition, but Ele.me will likely take on some new businesses under Alibaba given the latter's strategy to apply the New Retail philosophy to local service operations. 

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Keywords: Alibaba , Ele.Me