Bloomberg reported yesterday that Alibaba plans to purchase the roughly-60 percent of Ele.me that it currently doesn’t own from the other investors, which include search giant Baidu.
Alibaba Group is seeking to acquire full control of Ele.me by buying out Baidu and other investors in the Chinese food delivery startup.
Beijing Hualian Department Store Co, which has a 2 percent stake in Rajax, which owns and runs Ele.me, said in a filing that Alibaba is in talks to buy out the other shareholders, Reuters reports.
A deal is yet to be in place, according to the Hualian filing.
According to Bloomberg, Ele.me is believed to have been valued at between US$5.5 billion to US$6 billion in a May fundraising last year.
After raising the funds, the startup bought Baidu’s food delivery business in August.
Alibaba owned 23 percent of Ele.me as of May last year, according to the Bloomberg report.
By gaining full control of the startup, Alibaba can shore up its last-mile delivery network. If the talks succeed and a deal materializes, Ele.me could now be valued at as much as US$9.5 billion.
As the operator of China’s top food takeout app, Ele.me, whose Chinese name means “hungry yet?” in Mandarin, runs a fleet of thousands of deliverymen on motorbikes across the country.
Alibaba first invested in the startup in 2016, and it doubled down to lead a US$1 billion investment in 2017, TechCrunch reports.
An acquisition “would hand Alibaba the biggest chunk of Chinese online food delivery and put it directly against Meituan Dianping,” which is backed by Tencent, Bloomberg noted.
China’s food delivery market was estimated to be worth about US$10.7 billion in the final quarter of 2017, up 16.2 percent from the previous three months, the report said, citing data from market consultancy firm Analysys.
Ele.me and Meituan Waimai were said to hold 48.8 percent and 43.1 percent market shares respectively.