Two Chinese startups separately backed by Alibaba Group Holding Ltd (阿里巴巴) and Tencent Holdings Ltd (騰訊) have agreed to a merger that is set to create a US$15 billion provider of local services, including restaurant reviews and movie bookings, people with knowledge of the matter said.
The combination of Meituan.com (美團網), part-owned by Alibaba, with Tencent-backed Dianping.com (大眾點評網) might be announced as soon as today, the people said, asking not to be identified because the information is private.
Meituan’s shareholders would own about 60 percent of the combined company, the people said.
A Meituan-Dianping combination would pose a threat to Baidu Inc (百度), which is investing US$3.2 billion over three years in Nuomi (糯米團購), its own local services venture.
“The two companies merging would allow them to have absolute dominance of the group-buying market, and require less cash burn,” Beijing-based IResearch (艾瑞諮詢) analyst Wang Weidong (王維東) said. “They will be putting a lot of pressure on competitors.”
Often compared with Groupon Inc, Meituan is the leading player in a group-buying market that was worth 77 billion yuan (US$12.11 billion) in the first half.
The company accounted for 51.9 percent of Chinese group-buying transactions in the first six months, according to a report by researcher Analysys International.
Dianping accounted for 29.5 percent, followed by Nuomi with 13.6 percent, the report said.
Meituan chief executive officer Wang Xing (王興) last year said the firm was on track to more than triple revenue to about US$300 million last year.
The company recently completed a funding round that valued the company at about US$10.5 billion, after originally seeking a valuation of as much as US$15 billion, one of the people said.
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