Alibaba makes a $9.5B bet on food delivery

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Alibaba makes a $9.5B bet on food delivery

By Gina Acosta - 04/02/2018
Jack Ma's Alibaba has been pouring money into brick-and-mortar operations as well as online startups.

Alibaba is accelerating its efforts to lead the delivery space by taking full control of Chinese startup Ele.me.

The Chinese internet giant said Monday that it will buy out all the shares outstanding of Ele.me it doesn’t already own in a deal that values the Shanghai-based company at $9.5 billion. Ele.me delivers takeout food as well as groceries and household items.

“We are excited for Ele.me to become a part of the Alibaba ecosystem," said Daniel Zhang, CEO of Alibaba Group. "Under the leadership of its founder and management team, Ele.me has achieved leading market share in China’s online food delivery and local services sector. Our shared belief that New Retail will create more value for customers and merchants has brought us together. Looking forward, Ele.me can leverage Alibaba’s infrastructure in commerce and find new synergies with Alibaba’s diverse businesses to add further momentum to the New Retail initiative.”

The Ele.me deal is part of a broader effort by China’s largest e-commerce company into logistics and brick-and-mortar. Alibaba is taking over delivery affiliate Cainiao and putting money into warehouses. It has also made investments in traditional retailers, including department store chain Intime Retail Group Co. and China’s largest operator of Walmart-style stores.

Ele.me also complements Koubei, Alibaba’s affiliated local services platform and provides extended synergies. By combining Ele.me’s online home delivery services with Koubei’s consumer acquisition and engagement capability for a range of restaurants and service establishments, Alibaba will be able to offer an integrated experience to consumers both online and offline.

Ele.me will continue to operate in its own brand and work closely with its existing partners and merchants. Alibaba will lend its full support to Ele.me including access to its New Retail infrastructure, product offerings and technology expertise.

Upon completion of the acquisition, Zhang Xuhao will become Chairman of Ele.me and special advisor to Alibaba’s CEO on New Retail strategy. Wang Lei, Vice President of Alibaba Group, will become chief executive of Ele.me. Wang joined Alibaba in 2003 and has held a number of senior positions in Alibaba’s consumer e-commerce, B2B, O2O service and healthcare businesses.

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