Three becomes two

8 October 2015 By Robyn Mak Follow @mak_robyn

A mooted $15 bln tie-up between two discount shopping sites comes months after the country’s top taxi apps joined forces. Web giants like Alibaba and Tencent have poured billions into startups that connect local services to users. But subsidy wars are testing investors’ patience.

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China’s two most popular group discount shopping sites, Meituan and Dianping, announced they would merge on Oct. 8. Under the terms of the deal, the two companies will continue to operate independently under separate brands. The chief executives will become co-chief executives for the newly merged company.

The combined entity would be valued at more than $15 billion, according to people familiar with the situation.

Meituan, which operates a group discount shopping site similar to U.S.-based Groupon, is backed by e-commerce group Alibaba. The private company was planning to raise more than $1 billion in a funding round that valued the group at more than $15 billion, the Wall Street Journal reported in July.

Dianping, which offers similar deals as well as restaurant reviews, is 20 percent owned by social media and gaming group Tencent.

The merger is supported by shareholders of both companies including Alibaba, Tencent and Sequoia Capital. China Renaissance acted as financial advisor to both companies.

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