Ele.me merges with Baidu Delivery

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Ele.me, one of China’s leading online food delivery service backed by Alibaba Group announced on Thursday to acquire Baidu Delivery, the food delivery arm of search engine giant Baidu Inc, as a fully-owned subsidiary.

The deal is supported by two of the China’s Internet titans. Alibaba, as a major shareholder of Ele.me, offered capital for the deal and Baidu also becomes a shareholder of Ele.me through the deal, according to the press release Ele.me sent to the CGTN Thursday.

Ele.me paid 500 million US dollars for Baidu Delivery and 300 million US dollars for the latter’s traffic entrance, caijing.com reported, noting the whole deal cost Ele.me 800 million US dollars in total.

Baidu Delivery will continue to operate as an independent brand while retaining its existing management team.

Both Baidu and Alibaba promised more support to the new combined delivery platform in traffic, technology as well as capital and insurance, the press release said.

Through the backing of both Alibaba and Baidu, the combined business is poised to lead the online-to-offline service industry in China, said Zhang Xuhao, Ele.me Chief Executive Officer.

A food deliveryman gives food to a customer. VCG Photo

Ele.me enjoys significant advantages in terms of scale of its operations in over 2,000 cities with more than 1.3 million merchants.

Baidu Delivery, in three years of operation, has managed to reach 300 cities, connecting one million merchants with over 100 million users.

The total transaction revenue of China’s takeout food delivery market in the first half of 2017 is estimated to be growing at the rate of 23.1 percent year-on-year to 204.56 billion yuan. Ele.me leads with a 41.7 percent market share, followed by Baidu Delivery at 13.2 percent, according to data from iiMedia Research.

The merger of the two captures half of the market in China, representing a turning point for the industry.