Bottom line: Alibaba could take control of Ele.me after the latter’s latest fund-raising, and then make a bid for Baidu’s take-out dining service, leaving just two major players in the sector as it nears a more sustainable state.
Alibaba set to swallow Ele.me?
The take-out dining wars have taken another interesting twist, with word that one of the oldest players, Ele.me, is on the cusp of raising a fresh $1 billion in new funds. What’s interesting about this latest fund raising is that it’s being led by Alibaba (NYSE: BABA), which is also trying to carve out a niche in the market through its own Koubei take-out delivery service. But even more intriguing is the possibility that this new funding could be aimed at giving Ele.me the firepower it needs to buy out Baidu’s (Nasdaq: BIDU) take-out delivery service, which is reportedly being shopped by the country’s leading search engine.
There are many threads to this story, but the bottom line is an end game is slowly coming into sight for China’s take-out delivery business, following the typical boom period we often see for this kind of emerging sector. The current field of take-out dining services is dominated by three names, Alibaba-backed Ele.me, Tencent-backed (HKEx: 700) Meituan-Dianping and Baidu take-out. Read Full Post…
Bottom line: Alibaba’s Koubei is unlikely to gain major traction despite its $1.1 billion in new funding, due to its late arrival to a crowded O2O take-out dining space already dominated by Baidu, Ele.me and Meituan-Dianping.
Koubei raises $1.1 billion
The longer I stay in China, the more the latest stories coming from the Internet sector look like I’ve seen them before. That’s certainly the case with Koubei, the Alibaba (NYSE: BABA) online-to-offline (O2O) take-out dining delivery service, which is close to landing a fresh $1.1 billion in new funding. In this case, Alibaba’s extremely late arrival to the space looks a lot like its vain attempt to play catch-up to Tencent’s (HKEx: 700) WeChat with a service called Laiwang back in 2013. Read Full Post…
Bottom line: Alibaba’s new tie-up with Car Inc hints at a looming divorce with Didi Kuaidi, while a major new funding for its Koubei unit foreshadows a major new push that will further heat up intense competition in take-out delivery services.
Koubei seeks big new funding
Just days after reports emerged of a massive new funding for its Ant Financial unit, e-commerce leader Alibaba (NYSE: BABA) is back in the fund-raising headlines with big plans for its Koubei take-out dining unit. At the same time, an intriguing new story about a strategic Alibaba alliance with an aggressive new player in the hired car services space hints that the company may also be contemplating a divorce with national leader Didi Kuaidi.
Both of these stories reflect the catch-up game that Alibaba is playing in two important growth areas of the Internet. Alibaba previously had a presence in both through investments in hired car service provider Kuaidi and group buying site Meituan. But both of those partners entered mega-mergers over the last 6 months with their major rivals. As a result, Alibaba has divorced itself from the current Meituan Dianping, and is looking to build up its own rival Koubei take-out dining service. (previous post) Read Full Post…
The following press releases and news reports about China companies were carried on April 12. To view a full article or story, click on the link next to the headline.
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Car Inc (HKEx: 699) Hired Car Services Unit in Strategic Tie-Up with Alibaba (NYSE: BABA) (Chinese article)
Alibaba’s (NYSE: BABA) Koubei Soliciting Up to $2 Bln Funding – Report (English article)
Flight Data Company Feichangzhun Raises 933 Mln Yuan in Third Funding Round (Chinese article)
China’s HNA to Buy Airline Caterer Gategroup for $1.5 Bln (English article)
Bottom line: Cautionary comments from Caixin and Ele.me about investments from Alibaba and its affiliates reflect a growing wariness from companies at accepting money and yielding control to the e-commerce giant.
Alibaba’s Ant invests in Caixin
The voracious Alibaba (NYSE: BABA) is in 2 new M&A headlines as we head into the end of the week, led by word that its Ant Financial affiliate was an investor in a new fund-raising round in Caixin, one of China’s best respected financial media. A second headline has take-out dining pioneer Ele.me denying reports that Alibaba, which is already one of its biggest shareholders, will devour the company completely. Instead, Ele.me is saying it will continue working closely with Alibaba’s own take-out delivery service called Koubei.
Both headlines reflect a growing resistance by founders of these companies to outright ownership by Alibaba-related companies. In the first case, Caixin was quick to issue a statement saying Ant was only one of several new investors in its new funding round. Ele.me’s case is similar, quashing earlier speculation that it would ultimately get swallowed up by its cash-rich backer. Read Full Post…
Bottom line: Alibaba is placing its take-out dining service bets on Ele.me with its new $1.25 billion investment, and will spend other major resources next year to try to clean up its sites of trafficking in fake goods.
Alibaba invests in Ele.me
E-commerce juggernaut Alibaba (NYSE: BABA) is back in the M&A market, gobbling up a headline-grabbing 28 percent of leading online-to-offline (O2O) take-out dining service Ele.me for a tidy $1.25 billion. Alibaba has yet to confirm the deal, which would become the latest in a growing string of investments worth $1 billion or more for the company. A deal of this size would have been major news just 3 years ago before a wave of M&A began sweeping China’s Internet, though now such transactions have become far more common.
Meantime, Alibaba is in another set of headlines in its battle against piracy, with word that it’s adding 200 people to the team charged with ridding its huge online marketplaces of trafficking in pirated goods. This particular move comes less than 2 weeks after Alibaba managed to avoid seeing its name reappear in an annual US list of the world’s most notorious marketplaces for trafficking in pirated goods. Having dodged that bullet, Alibaba is now showing it plans to get far more serious in tackling the problem next year. Read Full Post…
Bottom line: A new landscape in China’s O2O restaurant services market is taking shape around the “big 3” firms of Alibaba, Baidu and Tencent, with a Tencent-backed Meituan-Dianping the most likely to succeed.
Alibaba eyes Ele.me stake
We’re seeing more signs of a major shuffle in the China market for online-to-offline (O2O) dining services, with e-commerce leader Alibaba(NYSE: BABA) at the center of 2 major new developments in the space. One would see Alibaba invest $1.5 billion for about a third of Ele.me, the leader in O2O takeout dining services. The other has media reporting that Alibaba is looking to sell its 7 percent stake in Meituan-Dianping, China’s recently formed leading group buying site that operates a rival takeout dining service.
The big driver behind both of these stories is a major consolidation taking place in the O2O marketplace, where money-losing companies are suddenly scrambling to find wealthy backers after being cut off by their more traditional funding sources. Many of those companies have found a receptive audience from China’s cash-rich “big 3” Internet titans of Alibaba, Tencent(HKEx: 700) and Baidu (Nasdaq: BIDU). Read Full Post…
Bottom line: Reports of a recent spat between Meituan and Alibaba are probably exaggerated, but do point to growing tensions that could ultimately prompt Alibaba to sell its small stake in Meituan.
Alibaba, Meituan clash in takeout dining
Everyone is trying to interpret whether a split is imminent between e-commerce leader Alibaba (NYSE: BABA) and leading group buying site Meituan, following a flurry of reports about a spat between the pair over the past few days. The situation is casting a spotlight on the massive web of cross-ownership relationships between many of China’s Internet companies, which is creating odd bedfellows and other conflicts as a wave of mega mergers has swept China’s Internet over the last 2 years.
In this case the conflicts are coming on 2 fronts. The larger of those is related to Meituan’s pending mega merger with archrival Dianping, in a deal announced last month. That union also brought together China’s 2 largest Internet companies in another odd partnership, since Meituan is partly owned by Alibaba and Dianping counts Tencent(HKEx: 700) as one of its largest investors. Read Full Post…
Bottom line: Contention around Meituan’s new mega-funding and Ele.me’s urgent desire to sell itself reflect overheated competition in the O2O restaurant services market, which could result in a major shake-up over the next 12 months.
Meituan denies rumors of funding collapse
Just a couple of days after reports emerged about the latest fund-raising by leading group buying site Meituan, the newest reports are painting a more chaotic scene in the sector for online-to-offline (O2O) services involving collaboration between web sites and restaurants. Meituan is once again in the news, though this time it’s denying rumors that its latest fund-raising has collapsed. Meantime, take-out dining delivery specialist Ele.me is also reportedly in frantic need of cash due to stiff competition gobbling up the industry.
This pair of stories reflects a cycle that’s all too common for emerging industries in China. That cycle typically sees one or two companies find success in a new business area, sparking a gold-rush that sees many others rush into the space. The result is always a surge in overcapacity, which is almost always followed by a shake-out that sees most companies close or withdraw from the business. Read Full Post…
Bottom line: Intensifying competition in dining-related O2O services is pressuring Meituan to raise more funds, and the company should seriously consider a strategic alliance with Alibaba.
O2O dining wars dog Meituan
Online-to-offline (O2O) services have become the flavor of the day on China’s Internet, and take-out dining has emerged at the epicenter of a stampede by all 3 of China’s leading Internet companies to develop the market. Over the last 2 years, leading search company Baidu (Nasdaq: BIDU), e-commerce leader Alibaba (NYSE: BABA) and social networking giant Tencent (HKEx: 700) have all launched major initiatives in the space, collectively pouring hundreds of millions of dollars into the area.
Against that backdrop, the independent Meituan is emerging as an orphan in the space, since it’s the only player without a major backer despite its status as China’s top group buying site. That could explain the latest reports that say Meituan has returned to financial markets and is in the process of raising up to $2 billion in new funds, less than a year after it raised $700 million in another massive cash-raising exercise. Read Full Post…
The following press releases and media reports about Chinese companies were carried on September 10. To view a full article or story, click on the link next to the headline.
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3 China Telcos to Start Taking iPhone 6s Orders from Sept 10 (Chinese article)
Alibaba’s (NYSE: BABA) Koubei to Spend 5 Bln Yuan on Offline Merchants in 2015 (English article)
Minsheng Investment to Spend 30 Bln Yuan on Indonesia Industrial Park (Chinese article)
Coolpad (HKEx: 2369) Shares Drop 17 Pct at Trading Resume, Amid Qihoo Dispute (Chinese article)
LeTV (Shenzhen: 300104) Invests in Battery Charging Company (Chinese article)
