NewMeituan and Dianping merge to form online-to-offline giant
Leading online-to-offline service providers join forces in mainland's highly competitive market
China's two biggest online-to-offline (O2O) service providers, backed separately by rivals Alibaba Group Holding and Tencent Holdings, announced a merger on Thursday as internet firms join forces to prosper in a highly competitive market.
The merged company could be valued at US$15 billion or more, with a more precise valuation possibly coming in the next few weeks as it negotiated a fresh round of funding with investors, a source with knowledge of the deal said.
A combination of the two unlisted O2O firms could pose a threat to the plans of Baidu, China's top internet search engine, which has unveiled plans to invest US$3.2 billion in O2O unit Baidu Nuomi over the next three years.
Baidu spokesman Kaiser Kuo described the merger as "an extreme measure that shows just how seriously Meituan and Dianping view the threat from Baidu Nuomi".
"Between March and September, Baidu Nuomi gained about two percentage points a month of market share by gross merchandise volume, according to our analysis. In the same period, Meituan's market share declined at about the same rate."