Alibaba to acquire China’s Ele.me at $9.5b valuation
Alibaba Group has agreed to acquire all the remaining shares of Ele.me, a Chinese food delivery platform backed by several private equity investors, in a transaction that values the company at $9.5 billion.
Alibaba and its affiliate Ant Small and Micro Financial Services Group currently own approximately 43% of Ele.me, according to a statement. The companies invested $1.25 billion in Ele.me in April 2016.
Ele.me will continue to operate under its own brand following the acquisition, but Alibaba will combine the company’s services with its existing local services platform Koubei, with a view to offering an integrated online and offline experience to consumers. In addition, Alibaba Group’s vice president Lei Wang will become the CEO of Ele.me, while Ele.me's founder and current CEO Zhang Xuhao will become chairman and serve as a special advisor to Alibaba on its new retail strategy.
Founded in 2009, Ele.me claims to work with more than 1.3 million restaurants across 2,000 cities, serving in excess of 260 million consumers. The company's logistics unit, Fengniao, has around three million couriers – including full-time staff in top-tier cities and part-time courier arrangements with third-party providers.
Ele.me has raised more than $2 billion since inception. This includes a $350 million Series E round in January 2015 and another $630 million round seven months later. Didi Chuxing subsequently invested an undisclosed sum. Other backers in the previous rounds include Sequoia Capital, CMC Capital, JD.com, and Tencent Holdings. In August, Ele.me merged with its competitor Baidu Waimai, the food delivery business of Chinese internet giant Baidu.
The latest acquisition deepens Alibaba’s competition with Tencent-backed Meituan-Dianping, which was formed by a merger in 2015, in the local services space. Alibaba previously owned shares in Meituan-Dianping, but it sold its stake afterward in order to focus on its own platform Koubei. Koubei then raised $1.1 billion funding round in January last year, led by Silver Lake, CDH Investments, Yunfeng Capital and Primavera Capital.
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