Alibaba is planning a multi-billion dollar merger in a bid to dominate China's service market. According to sources, the company's planning to merge its delivery units, including food delivery platform Ele.me and lifestyles services firm Koubei. They say it's looking to raise up to $5 billion for the combined entity, which could be valued at up to $25 billion.
Reuters' Kane Wu has this exclusive.>> I wouldn't call this move a surprise, as we know that Alibaba has been trying to expand into the online to offline on-demand local services market for a while. And it has fully acquired full ownership of Ele.me in April, and Koubei was a joint venture set up by Alibaba and Ant Financial.
All these business have similar but also differentiated market segments. And I think by merging them together, Alibaba will try to have full control on one single platform. And it would allow it to better compete with its competitors.>> It comes as Alibaba faces stiff competition from Meituan-Dianping, backed by Tencent.
They've been fighting for supremacy in China's hot online to offline market, where apps link smartphone users with bricks and mortar businesses. They're the main two companies that offer that service in China.>> One source says Alibaba's planning fundraising later this year for this new combined entity, but the company won't comment.
>> I think that Alibaba or all of those units that we talked about haven't really been saying anything about this plan in public. I think there is a lot of moving parts at the moment. And obviously, Ele.me is a fresh made under Alibaba. So there is all of internal consolidation, including its management, its strategy that's still ongoing.
So, I mean, this is definitely something that we look forward to later this year. But right now, we can't say for sure that there is a definite plan at the moment.>> Meituan-Dianping, on the other hand, is expected to raise more than $4 billion when it floats in Hong Kong in the coming months.
Last year, the company was valued at $30 billion in a fundraising round.