Alibaba Group Holding Ltd (阿里巴巴) is buying full control of the start-up Ele.me (餓了麼) as it steps up efforts to expand in China’s fast-growing market for local delivery of food and other services.
The deal implies an enterprise valuation of US$9.5 billion for Ele.me, Alibaba said in a statement yesterday, without saying how much it is paying.
Alibaba and affiliate Ant Financial, formally known as Zhejiang Ant Small & Micro Financial Services Group Co (浙江螞蟻小微金融服務集團), already owned about 43 percent of the start-up.
Alibaba paid all cash in the deal and has acquired all the shares formerly held by Baidu Inc (百度), a person familiar with the matter said.
Ele.me — which alludes to “hungry yet?” — operates an army of delivery people on motorbikes across the country and is vying for supremacy in the local services industry with Meituan Dianping (美團點評), a start-up backed by Alibaba rival Tencent Holdings Ltd (騰訊).
The market is surging as people increasingly turn to their smartphones to order food, schedule beauty treatments and hire domestic helpers. It is also strategically important for Alibaba and Tencent as a means to promote their respective payment services.
“As one of the most frequently used applications, food delivery is the single most important entry point in the local services sector,” Alibaba Group chief executive officer Daniel Zhang (張勇) said in an internal email to staff members yesterday. “We can already see that a vast, multidimensional local instant delivery network formed through a food delivery service will be an essential piece of the commerce infrastructure.”
Bloomberg News reported in February on Alibaba’s plans to buy out other investors in Ele.me. In a sign of the heated market, Meituan has become one of the most valuable start-ups in the world.
The company is seeking to go public as soon as this year at a valuation of at least US$60 billion, people familiar with the matter said last month.
The Ele.me deal is part of a broader foray by China’s largest e-commerce company into logistics and brick-and-mortar assets. Alibaba is taking over longtime delivery affiliate Cainiao (菜鳥) and putting money into warehouses.
It has also made investments in traditional retailers, including department store chain Intime Retail Group Co (銀泰商業集團) and China’s largest operator of Walmart-style hypermarkets.
“If the Ele.me distribution network is integrated with Cainiao, it can become a more efficient asset and bring it to break-even quicker,” New Street Research analyst Kirk Boodry said.
Baidu had ceded control of its own food-delivery unit to Ele.me last year as the start-up and Meituan became the two biggest competitors in China’s online food-delivery market.
Ele.me founder Zhang Xuhao (張旭豪) is to become chairman of the company, while Alibaba Group vice president Wang Lei (王磊) is to become chief executive officer of Ele.me, a company statement said.
Alibaba continues an expansion in e-commerce as it faces greater competition across Asia.
The company last month said that it expects to invest another US$2 billion in Lazada Group SA to bolster its presence in Southeast Asia, where Amazon.com Inc. has launched in Singapore and Sea Ltd’s Shopee is expanding to win consumers.
HEAVY INVESTMENT: Moody’s affirmed the firm’s ‘Aa3’ rating with a ‘stable’ outlook due to its leading position in the industry and ability to match customer requirements Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue this year is expected to increase about 21 percent to NT$1.29 trillion (US$44.01 billion) from NT$1.07 trillion last year, driven by strong demand for advanced 5-nanometer and 7-nanometer chips mainly used in smartphones and high-performance computing devices, a Moody’s Investors Service report on Wednesday said. TSMC’s rate of revenue growth next year is to increase to 7.5 percent, the ratings agency said. The company, which supplies 5-nanometer chips for Apple Inc’s new iPad series, has introduced the advanced chips ahead of its competitors and gained a significant share of the market for the foundry industry’s
NO VIRUS BLUES: A SEMI Taiwan official said that the virus does not slow down the global semiconductor industry’s investment in manufacturing equipment The production value of the nation’s semiconductor industry is expected to grow 16.7 percent this year from last year, outpacing the global industry’s 3.3 percent growth, industry association SEMI said yesterday. That would help Taiwan safeguard its second spot in the global semiconductor market with a production value of more than NT$3 trillion (US$102.73 billion), SEMI Taiwan president Terry Tsao (曹世綸) told a media briefing in Taipei for the Semicon Taiwan trade show beginning today. The global semiconductor industry’s production value is expected to increase to US$426 billion this year, SEMI said. In terms of semiconductor equipment investment, equipment billings from Taiwanese firms
Intel Corp has received licenses from US authorities to continue supplying certain products to Huawei Technologies Co (華為), a company spokesman said yesterday. Washington has been pushing governments around to world to squeeze out Huawei, saying that the telecom giant would hand data to Beijing for espionage. From Monday last week, new curbs have barred US companies from supplying or servicing Huawei. This week, the state-backed China Securities Journal reported that Intel had received permission to supply Huawei. China’s Semiconductor Manufacturing International Corp (SMIC, 中芯國際), which uses US-origin equipment to make chips for Huawei and other companies, last week confirmed that it had sought
Taipei Times: When do you think the hospitality industry can return to how it was before the COVID-19 pandemic? How does Formosa International Hotels Group (FIH, 晶華酒店集團) fare this quarter and beyond? FIH chairman Steve Pan (潘思亮): The virus outbreak will have a serious impact on business travel, driven mainly by meetings, incentive travel, conferences and exhibitions over the past three decades. For the past six months, many businesspeople have grown used to exchanging information on the Internet, where more people can participate. The trend might sustain for three to five years until people are vaccinated and it is safe to