Alibaba announced today that it will acquire all outstanding shares that it does not already own in food delivery platform Ele.me. The transaction implies the enterprise value of Ele.me at US$9.5 billion. Alibaba and its financial arm Ant Financial are already the largest shareholder in the company with approximately 43% shares.
Rumors of Alibaba’s acquisition of Ele.me have been circulating since December last year with the peak hitting at the end of February when Beijing Hualian Department Store, a shareholder in Hong Kong-based Rajax which owns and operates Ele.me, announced that Rajax is indeed talking to Alibaba about increasing its stake in Ele.me.
According to Alibaba’s statement, Ele.me will continue to operate in its own brand while the founder of Ele.me, Zhang Xuhao, will become Chairman of Ele.me and special advisor to Alibaba’s CEO on New Retail strategy. Wang Lei, Vice President of Alibaba Group, will become chief executive of Ele.me.
As of June 2017, Ele.me covers 2000 cities in China including 130,00 restaurants and 260 million users. The company has more than 15,000 employees and its army of registered deliverymen has exceeded 3 million as of April 2017. Ele.me’s Hummingbird delivery service (蜂鸟配送) will an important addition to Alibaba’s new retail strategy.
Daniel Zhang, CEO of Alibaba Group, commented the acquisition in a statement:
“We are excited for Ele.me to become a part of the Alibaba ecosystem. Under the leadership of its founder and management team, Ele.me has achieved leading market share in China’s online food delivery and local services sector. Our shared belief that New Retail will create more value for customers and merchants has brought us together. Looking forward, Ele.me can leverage Alibaba’s infrastructure in commerce and find new synergies with Alibaba’s diverse businesses to add further momentum to the New Retail initiative.”