China

UPDATE: Alibaba-Backed Ele.me to Reportedly Acquire Baidu’s Food-Delivery Unit

Summary:

  • Chinese food delivery platform Ele.me is reportedly in discussions with Baidu.com (BIDU.NASDAQ) to acquire its food-delivery unit, according to Xinhua Net.
  • Negotiations have almost been finalized and the acquisition might be completed as early as August.
  • Ele.me has declined to comment on the news, and Baidu Food Delivery has said that they are not aware of the deal.

Why It Matters:

  • Earlier, SGI reported on rumors that China’s leading delivery company S.F. Holding (002352.SZ) planned to invest in, or even acquire, Baidu’s food delivery unit.
  • Baidu uses third-party logistics firms to support its food delivery businesses and this has led to Baidu’s delivery services becoming more expensive and less efficient. Moreover, Baidu Food Delivery has been under pressure recently due to a transformation of the business and management resignations.
  • Alibaba Group (BABA.NYSE) and its financial services arm Ant Financial invested more than US$ 1 billion in Ele.me in May and became Ele.me’s largest shareholder. The acquisition of Baidu’s food-delivery unit could facilitate Ele.me’s strategy for entering the high-end market in this business sector.