Alibaba Group Holding Ltd. (NYSE: BABA) announced on Monday that it had reached a deal to buy full ownership of the food delivery startup Ele.me in a deal valuing the company at $9.5 billion.
Ele.me is a major player in China’s fast-growing online food delivery business, with 9 to 10 million orders served daily. The company connects 2 million shops and 260 million users.
“We are excited for Ele.me to become a part of the Alibaba ecosystem,” said Alibaba’s chief executive officer, Daniel Zhang.
Alibaba’s plans were revealed in February by Beijing Hualian Department Store Co. Ltd., a shareholder in Ele.me. According to Reuters, Alibaba and its subsidiary Ant Financial already hold a 43 percent stake in Ele.me.
In August, Baidu Inc (ADR) (Nasdaq: BIDU) exited the food delivery business, selling Baidu Waimai to Ele.me for $800 million. According to Analysys, Ele.me boasted a 50.6 percent market share in China last year.
Ele.me was founded in 2008 in Shanghai by Jia Kang and Xuhao Zhang.
Alibaba and Ant Financial invested $1.25 billion in the company in 2016 and followed up last year with another $1 billion investment.
Ele.me will be teaming up with Koubei, the local services app owned by Alibaba.
The two will be competing with Meituan-Dianping, which is backed by Alibaba rival Tencent Holdings Ltd (OTCMKTS: TCEHY). Meituan-Dianping raised $4 billion last year and is eyeing an initial public offering in Hong Kong later this year.
Ele.me founder Xuhao Zhang will serve as chairman. Wang Lei, an Alibaba vice president, will serve as the company’s CEO.