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Meituan merges with Dianping to create a mega O2O service platform

meituan, dianping, chinese e-commerce

Meituan, a group buying service backed by Alibaba, said that it would join forces with Dianping, a consumer review website backed by Tencent, hoping to create an e-commerce juggernaut.


The two companies said that they would set up a new company that would help businesses sell goods and services online in China. They did not provide further details on how the new company would work. They said both Dianping and Meituan would keep their brands and management structures and operate independently.


"We both recognize the enormous potential of China's O2O industry, and therefore this strategic cooperation was a shared and almost inevitable decision," Zhang Tao, the chief executive of Dianping, said in the release, referring to online-to-offline transactions.


He added that the joint venture would allow "both companies to better leverage our respective advantages in order to accelerate product innovation, deepen service offerings and speed up industry expansion."


The merger shows the power China's largest Internet companies wield over emerging start-ups. Though Meituan is one of the last survivors of a huge subsidies war between group buying sites over the past five years, the site has suffered as cash-rich companies like Baidu and Tencent have thrown more money at group buying through investments in rivals like Nuomi, Dianping and the food delivery service Ele.me.


The competition has been tough on Meituan, which has gotten some investment but little other support from Alibaba, one of China's giants. This deal seeks to improve that, bringing one of China's last large independent e-commerce companies into the orbit of Tencent, and to a lesser extent Alibaba.


Mr. Tao will be co-chairman and co-chief executive with Meituan's chief executive, Wang Xing. Mr. Wang said the cooperation would enable "us to focus on better serving our consumers and merchants, and allows us to concentrate on developing new businesses and driving product innovation." Neither company would say how much the new joint operation would be worth.


Since setting up in 2010, Meituan has expanded into businesses that include food delivery and seat bookings at movie theaters. Its $700 million fund-raising round in January valued it at $7 billion.


Dianping began as a consumer review and merchant information company, but it has expanded into group buying, food delivery and restaurant reservations. It raised $850 million in its last round of fund-raising in April, and media reports value the company at $4 billion.



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