China’s Meituan said to agree to $15 billion Dianping merger

A merger between group-buying and restaurant-review websites Meituan and Dianping, announced on Thursday, makes the two previous rivals the third Internet duo this year to join forces.

This round of mergers will appear quite familiar to people following the tech industry in China.

Now, Meituan and Dianping are providing a range of localized services in China, which includes restaurant discounts, movie bookings, reviews as well as food delivery services. Dianping accounted for 29.5 percent, followed by Baidu’s Nuomi with 13.6 percent. Many Web startups that had been burning cash through big incentives to draw customers are facing pressure to cut their losses. “It’s getting harder to find people who are willing to invest”. A spokeswoman for Tencent didn’t immediately respond to a mobile-phone text message and e-mail seeking comment during a public holiday in China. Chinese users of location-based services could increase 29% to 400-million by 2017, according to internet consultancy IResearch. The company claims over 130 million annual active purchasers, and it has a presence in more than 1,100 cities across China. The combined business will be worth perhaps $15 billion.

The combined entity will form one of China’s biggest online-to-offline (O2O) service providers, and could be valued at more than US$15 billion. An Alibaba-Tencent tie-up would mirror the creation of Didi Kuaidi this year via a merger of two competing taxi-hailing apps they separately backed. That marriage was meant to curtail an aggressive expansion by Uber Technologies and marked a rare co-operation between firms that still compete head-to-head in e-commerce, entertainment and banking. The other juggernaut in the space is China’s Internet search giant Baidu, who told VentureBeat in an emailed statement that they see the merger as “an extreme measure that shows just how seriously Meituan and Dianping view the threat from Baidu Nuomi”. Overseas, it invested in Uber’s rivals Lyft in the USA and India’s Ola.

It’s not the first time Alibaba and Tencent have worked together.