Baidu sells its food delivery service to Alibaba-backed Ele.me

China’s internet giant Baidu is selling its food delivery service Baidu Waimai to rival Ele.me, backed by Alibaba. The two top players in the takeout delivery service sector have reached a deal and more details will be announced as soon as this week (in Chinese), local media are reporting.

Rumors of the merger have been circulating for a while, and local media revealed this week with unnamed sources that the deal is about to finalize. Local financial magazine Caijing reported that the merger is valued at around $500 million (in Chinese) and is funded by a combination of cash and equity.

As part of the deal, Baidu Waimai will continue to operate as an independent entity for a year, and the brand name can still be put in use by Ele.me for 18 months, according to China Business News.

Ele.me will also pay $300 million to be able to leverage Baidu’s other services to bring in more data, including Baidu Maps, Baidu Search, and group-buying service Baidu Nuomi.

After the merger, Ele.me will be the one to beat. The fast-growing startup last month received $1 billion in Series G funding from Alibaba and its financial affiliate Ant Financial.

The merger marks a further step in the heated battle between Alibaba and Tencent—who backs another major takeout delivery service, Meituan-Dianping—leaving them the only two major players in the food delivery sector in China.