A Meituan-Dianping combination would pose a threat to Baidu Inc, which is investing $3.2 billion over three years in Nuomi, its own local services venture. A wide range of platforms combined into several leading firms like Meituan and Dianping.
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It accounted for 51.9 percent of Chinese group buying transactions in the first six months, according to a report by researcher Analysys global. The deal is unconfirmed, but state-run Xinhua speculated it could be worth $15 billion. Dianping focuses on customer reviews, group-buying offers (think Groupon), payment solutions, urban and lifestyle services, online restaurant reservations, food delivery, and e-coupons. Chinese users of location-based services could increase 29% to 400-million by 2017, according to internet consultancy IResearch. Meituan.com is a group-discount web… The company claims over 130 million annual active purchasers, and it has a presence in more than 1,100 cities across China.
The combined entity will form one of China’s biggest online-to-offline (O2O) service providers, and could be valued at more than US$15 billion.
Like Didi Dache and Kuaidi Dache, Meituan and Dianping were at war, offering price cuts, favorable retail rates and anything to gain the attention of both consumers buying and merchants selling.
This deal isn’t the first time companies backed by Chinese rivals Alibaba and Tencent have teamed up. “We both recognize the enormous potential of China’s O2O [online-to-offline] industry, and therefore this strategic cooperation was a shared, and nearly inevitable, decision”. A merger between the two will symbolize a significant development in the industry. Tao and Xing will both be co-chairmen and co-CEOs of the new company.
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“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. A growing number of companies, Alibaba and Tencent among them, are betting rising incomes will drive online and mobile ordering of everyday services despite a decelerating economy.
