Marking yet another huge deal, Alibaba Group (BABA) said it would take over food delivery app Ele.me for an estimated value of $9.5 billion. The e-commerce giant, along with its affiliate Ant Small & Micro Financial Services Group, currently holds around a 43% stake in the delivery company.
Alibaba’s Vice President Wang Lei is expected to become CEO of Ele.me following the deal while the latter’s current CEO will become chairman and serve in an advisory role at Alibaba.
This deal will help Alibaba expand its food delivery business along with its existing delivery service Koubei, as the e-commerce giant steps up its competition with Tencent Holdings Ltd. China’s e-commerce market is seeing increasing growth and competition with the existing players investing more in mobile payments, deliveries, and automated stores.
Ele.me, which bought Baidu deliveries last year, will retain its brand name after the acquisition but some parts of it might be combined with Koubei.
The rough translation of Ele.me is “Hungry?” Let’s see if this deal proves to be a healthy choice for Alibaba.
China looks to bring tech companies back home
In the meantime, it appears that China is trying to lure major tech companies such as Alibaba and Baidu to trade their stock in the country. China plans to issue depositary receipts for foreign-listed public companies with a market cap of over $32 billion. This trial combined with easier listing rules is expected to prompt firms like Alibaba and Baidu to consider a secondary listing in the country.
If successful, these companies could see an increase in their valuations causing others to follow suit.
While none of those above companies have confirmed any plans to participate in the listing trial, it is expected that several private firms are likely to qualify for listing.