Chinese conglomerate Alibaba is on the cusp of making one of the biggest deals in Chinese startup space in recent times. Alibaba, which is owned by Chinese billionaire Jack Ma, is said to be in talks to take complete control over the food delivery startup Ele.me. Currently, the e-commerce juggernaut along with its subsidiary firm Ant Financials own 40% stake in Ele.me while the remaining 60% is owned by other investors including Chinese search giant Baidu.
Alibaba and Ele.me have so far refused to comment on the news report. If this speculative deal does materialize, Alibaba may end up taking 100% control over the food delivery startup with Baidu and other investors making an exit with substantially good returns. The ongoing talks have reportedly valued the Chinese startup at nearly $9 billion.
Founded in 2008, Ele.me (which roughly translates into “Hungary Now?”) has over the years grown exponentially to emerge as one of the biggest names in the Chinese food delivery space. Today Ele.me and Tencent backed Meituan Dianping are the two most dominant players in the country’s food delivery space.
A complete control over Ele.me would most certainly give a huge boast to Alibaba’s ambition to dominate the country’s highly lucrative food delivery industry. At present China’s food delivery industry is estimated to be around Rmb204.6bn ($32.5bn). The deal would also pave for Alibaba –Tencent clash, which invariably will be billed as clash of titans.
Meanwhile, Alibaba’s complete buyout of Ele.me will end up giving lot of headroom to Baidu in financial terms. The search giant may use the money from sale out to invest in its new emerging businesses such as artificial intelligence and autonomous driving. Baidu over the last few quarters has been making exist from many non-core businesses.