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

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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.