The combination of Meituan.com, part-owned by Alibaba, with Tencent-backed Dianping.com may be announced as soon as today, the people said, asking not to be identified as the information is private. Likewise, Dianping began with Yelp-style listings before it adopted daily deals as well as meal deliveries from nearby restaurants. Uber is the obviously foe in the ride-hailing world, but Baidu – which recently plunged over $3 million into its online-to-offline service – and billion startup Ele.me are the rivals that have helped bring Meituan and Dianping together. Baidu’s Nuomi is the third-largest player in group buying with 13.6 percent of the market, according to Analysys.
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The heads of both companies will become co-CEOs of the new company, which will have two head offices, one in Beijing where Meituan is based and one in Shanghai, Dianping’s home. The deal is unconfirmed, but state-run Xinhua speculated it could be worth $15 billion.
Reports suggest the merger will create a company valued at $20bn (£13bn).
“It will be tempting to think of this merger as similar to that between Didi and Kuaidi”, Baidu spokesman, Kaiser Kuo, said in reference to the merger between China’s two largest car-hailing companies earlier this year. That marriage was meant to curtail an aggressive expansion by Uber and marked a rare cooperation between companies that still compete head-to- head in entertainment, e-commerce and finance.
“The two companies merging would allow them to have absolute dominance of the group-buying market, and require less cash burn”, said Wang Weidong, an analyst at Internet consultancy IResearch in Beijing.
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It’s not the first time Alibaba and Tencent have worked together. The other juggernaut in the space is China’s Internet search giant Baidu, who told VentureBeat in an emailed statement that they see the merger as “an extreme measure that shows just how seriously Meituan and Dianping view the threat from Baidu Nuomi”. “They will be putting a lot of pressure on competitors”.
