'China's Groupon' Meituan and Yelp-like Dianping likely to merge to create country’s biggest O2O services provider

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An online shopper in China browses Meituan's site to check for the day's bargains. Photo: SCMP Pictures

Published: 6:15pm, 7 Oct 2015Updated: 6:35pm, 7 Oct 2015

Meituan.com and Dianping Holdings, two of China’s biggest tech start-ups, are close to merging and the two former rivals will announce a deal in the next few days, according to media reports.

If Meituan, dubbed “China’s Groupon” and restaurant-review site Dianping are set to team up - as The Wall Street Journal and China's largest news portal Sina.com claim – they would create the country’s biggest online-to-offline (O2O) services provider with a combined value of over US$15 billion.

The deal seems prudent as it comes not only at a time of industry consolidation in China but will also help both partners out financially as O2O companies tend to burn cash due to their reliance on heavy subsidies and discounts to outspend their rivals.

The move follows other landmark deals in China’s tech sector in the last couple of years.

These include online video site Youku’s acquisition of rival Tudou in a US$1 billion stock deal in 2012 and the merger between advert sites 58.com, which is listed in New York, and Ganji.com earlier this year in a deal that may have taken their combined value to US$10 billion.

However the deal that attracted more attention this year was the merging in February of Alibaba-controlled Kuaidi Dache and Tencent-invested Didi Dache to create China’s market leading taxi-booking app, which at the time was valued at around US$6 billion.