Thu, Apr 05, 2018 - Page 10 News List

Meituan buying Mobike start-up in US$3.4bn deal

Bloomberg

Meituan Dianping (美團點評), the Chinese food review and delivery giant, is acquiring Mobike Technology Co Ltd (摩拜科技) in a deal that values the three-year-old bike-sharing start-up at about US$3.4 billion, people familiar with the matter said.

Meituan has agreed to buy full control of Mobike, whose chief executive officer would keep operating the business as an independent entity, Meituan said yesterday, without divulging details.

The deal values Mobike’s equity at about US$2.7 billion, and Meituan is to assume about US$700 million in debt, said one of the people, asking not to be identified because the matter is private.

Sixty-five percent of the purchase would be in cash, mostly to Mobike management, and 35 percent would be in stock, so Mobike investors would become Meituan shareholders, the person said.

The acquisition thrusts Tencent Holdings Ltd (騰訊) to the forefront of two key markets in direct opposition to Alibaba Group Holding Ltd (阿里巴巴) — on-demand delivery and bike sharing — and could escalate an ongoing battle between some of the world’s biggest Internet companies.

In bike sharing alone, Alibaba backs Mobike’s main rival Ofo Inc (共享單車), while car-hailing giant Didi Chuxing (滴滴出行), backed by Softbank Group Corp, has begun investing heavily in the same space.

Meituan itself, formed by a merger with Dianping, has grown into a super app, offering everything from group-buying deals and ride hailing to travel packages and payments. With a few taps to navigate its smartphone apps, Chinese customers can order hot meals, groceries, massages, haircuts and manicures at home or in the office.

It is unclear whether all of its management are to remain on board: Mobike cofounder Hu Weiwei (胡瑋煒) yesterday included a link to the Nine Inch Nails song The Beginning of the End in a post on her WeChat (微信) account.

“There’s no ‘ouster’ — from my perspective it’s a new beginning,” she wrote.

Meituan has begun discussions to go public in Hong Kong as soon as this year and is targeting a valuation of at least US$60 billion, people familiar with the matter said.

The company is also considering listing its shares in China if policies allow.

Its primary competitor is Ele.me (餓了麼), a similar provider of local services owned by Alibaba.

Mark Natkin, managing director of Beijing-based Marbridge Consulting, said the deal would help Meituan achieve its goal of producing a super app that caters to a swathe of user needs.

That in turn would help boost usage of online payments, a field dominated by Alibaba-backed Ant Financial Services Group (螞蟻金服) and Tencent’s WeChat.

While the price paid for Mobike might seem high considering the lack of a longer track record, Natkin said China’s Internet market is dominated by players like Tencent and Alibaba who are willing to pay a premium for potential break-out firms.

“It’s not a cheap deal, but it’s a key time in the development of the bike-sharing business to pick a winner and get behind it,” he said.

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