Rumor has been whirling that group-buying site Didatuan is pursuing a merger with coupon vendor VELO. An agreement has been reached for VELO to acquire the group buying service, according to people familiar with the matter. The rumor came as a latest signal of the breakdown in Chinese group buying sector.

IDG-backed Didatuan was founded in July 2010. After two and a half years of developments, it remained to be a mediocre player judging by user number, traffic and service. Though the company claimed to be on verge of “breaking even”.

Shanghai-based VELO was founded in 2006 and has raised three rounds of funding 2007 through 2010; the company helps local merchants like McDonald’s distribute coupons. Consumers can help-themselves print out paper-based coupons via its vendor machines scattered in metro stations and shopping malls in cities like Beijing and Shanghai.

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Charlie Sheng

动点科技驻湾区记者. Charlie is an entrepreneur based in San Francisco and Hong Kong who calls herself the undefeated caffeine champion. You can reach her at charlie.sheng (at) technode.com