Shanghai-based food-ordering platform ele.me's takeover of domestic food delivery company waimai.baidu in a transaction valued at about $500 million has been confirmed, the 21st Century Business Herald reported, citing people close to the matter.
The deal value decreased sharply from an initial offer of $2 billion in 2016, and the acquisition was made through a mixture of cash and stakes.
After the deal, waimai.baidu, which is backed by domestic technology giant Baidu Inc, will run an independent operation for a year, according to the media report.
Ele.me told the Global Times on Monday that it doesn't comment on market rumors.
A PR representative from Baidu told the Global Times that she had no information and declined to comment further.
Media reports said that the two parties held prolonged discussions over the deal and ele.me CEO Zhang Xuhao led a business team to visit Beijing in June for those negotiations.
Baidu will now put more focus on artificial intelligence (AI), the 21st Century Business Herald said.
Baidu has set a new strategic goal to focus on the AI sector, according to the company's second-quarter earnings report released on July 28. The report said that Baidu will bet on the business end market and leave the online-to-offline (O2O) segment to Tencent Holdings and Alibaba Group Holding.
Alibaba led a $1 billion investment in ele.me in May, Bloomberg said.
After ele.me acquires waimai.baidu, competition will intensify in the O2O sector, the report noted.
Represented by leading platforms such as waimai.meituan and ele.me, the market size of the life service O2O sector in China is forecast to reach 263 billion yuan ($39.4 billion) in 2017, up 76 percent year-on-year, the report said, citing market research firm iResearch.
