Alibaba To Sell Stake In Meituan-Dianping for $900 million
Alibaba Group Holding Limited has sold its stake in the delivery startup for $900 million to a group of investors
Alibaba Group Holding Limited has succeeded in reaching an approximately $900m agreement to sell its share in the Chinese biggest online provider of restaurant bookings, movie ticketing and some other on-demand facilities as the E-commerce giant is building its competing platform, according to people close to the matter.
The Hangzhou based organization has decided to spin off its share in Meituan-Dianping, established in 2015 by the merger of two rival startups, to an investors’ group, the people aware of the matter said. People have revealed that some of those investors who purchased the stake were also participants in the recent $3.3bn financing round of the delivery startup. The Online trading giant took the decision to sell its stake in the organization due to the merger of Meituan and Diaping that made its competitor internet company Tencent a shareholder.
The online retailer had already indicated its desire for refocusing on its owned online to offline operations, known as Koubei. Investors who purchased the stake of Alibaba made a payment of a discounted price that is equivalent to a valuation of $12.5bn for the delivery service provider, compared with the $15bn price paid by investors in the new financing round, the people aware of the situation stated.
The discount was offered due to the old shares of Alibaba that have a less downside protection rights than the new stake spun off in the round which took place recently. After adding $3.3bn received in the financing round, Meituan-Dianping is being currently valued at $18.3bn.
A number of investors participated in that funding round. These include the Singapore based Temasek Holding Pte Limited, venture-capital organization DST Global and Tencent. The downside- protection rights received by the investors in that financing round are including a ratchet clause which tells us that investors would get additional stocked provided that the startup’s future IPO price is lower than the valuation they succeed in paying in this existing round.
The purchased stake of Alibaba does not offer same terms to buyers .The offerings of Meituan-Dianping are to a certain extent similar to the restaurant-booking and group buying services sold by the US based Yelp and Groupon.
The company stated Tuesday that its cumulative transaction volume reached $25.84bn( 170bn yuan) in 2015. Rather than holding on its tiny stake in the delivery company, electronic Commerce Company is interested in focusing its efforts on the development of its owned food delivery service provider Koubei, as it is one that it can fully control, a person stated.
Koubei, the meaning of which is word-of-mouth reputation in Chinese is a joint project established in June by the online trading platform operator along with its financial affiliate, which jointly invested almost $1bn into it.
The internet giants of China have tried to extend their stake in the market in which they are fiercely competing for smartphone apps that connect users with brick and mortar services like movie ticketing, restaurant bookings, taxi rides and food deliveries.
