Chinese e-commerce giant Alibaba has acquired Ele.me, an online food delivery service, in a deal worth $9.5 billion. Ele.me, founded ten years ago and headquartered in Shanghai, is operational in over 2,000 cities and its subsidiary, Fengniao, fulfills over 2.6m orders per day at over a quarter of China’s food delivery market share.
Alibaba, whose stock price surged of over 10% in January 2018 alone, already owned 43% of Ele.me through its affiliate Ant Financial, and injected $1.25bn into the firm in 2016. Its full consumption into the Alibaba brand allows China’s largest tech company to continue a strategy of combining on- and offline shopping solutions.
“Looking forward, Ele.me can leverage Alibaba’s infrastructure in commerce and find new synergies with Alibaba’s diverse businesses to add further momentum to the New Retail Initiative,” Alibaba CEO Daniel Zhang said in a statement.
Alibaba and its sole domestic rival, Tencent, have led an unprecedented charge for China’s booming e-commerce market in recent years. So dominant is the pair that the landscape is set to become a real duopoly, very soon.
Today’s deal comes amid news that China’s tech stocks are performing well – and could even pose problems to American counterparts such as Amazon. US firms have taken a big value hit as marketeers are concerned about high prices, a trade war between Beijing and Washington DC, and regulation US President Donald Trump has recently promised.