Putting an end to rumors, Chinese conglomerate Alibaba on Sunday finally announced that it will buy Ele.me’s remaining shares. The deal will pave way for Alibaba and its subsidiary firm Ant Financials to have a complete control over the online food delivery startup. Both already own 43% stake in the high-profile Chinese startup.
The deal has put Ele.me’s market valuation to whopping $9.5 billion, according to a statement released by Alibaba. The high valuation makes the deal as one of the biggest deals in Chinese startup space in recent years. Alibaba also added that Ele.me will continue to operate under its current brand name and Mark Zhang (Ele.me’s co-founder) will take over the role of a chairman.
The rumors of Alibaba is likely to acquire a complete controlling stake in Ele.me have been doing rounds since February. Techpluto had also filed a story over this news report during the same period.
Now that the deal is sealed, Alibaba and Tencent will find themselves locked in a ferocious competition to take control of China’s burgeoning online food delivery market. Tencent owns controlling stake in Ele.me’s main rival Meituan Dianping. Interestingly, Alibaba owned substantial stake in Meituan. However, following its merger with Dianping, Alibaba began to dilute its stake in the startup.
Alibaba and Tencent’s strong interest in China’s online food delivery market is not without a reason. The mindboggling penetration of internet and smartphones across China over the last few decades has made this market a highly lucrative one. According to rough estimate, the market is estimated to be around Rmb204.6bn ($32.5bn).
Meanwhile, Ele.me’s deal once again marks Alibaba’s prolific interest in the startup space. Over the years, the Chinese tech behemoth has not only invested in several promising startups hailing from Mainland China but also from scores of startup from neighboring regions like India and Southeast Asia.