Chinese Internet Rivals Form New Company

Meituan.com and Dianping Holdings Ltd., two of China's largest Internet startups, said Thursday that they have created a new company in a deal that turns two rivals into a dominant player in restaurant bookings, movie ticketing and other online-to-offline services.

Meituan and Dianping said in a statement that the new company will be headed jointly by the chief executives of Meituan and Dianping. But Meituan and Dianping will continue to operate their platforms and services separately, the companies said.

The Wall Street Journal reported Wednesday that Meituan, a Chinese service similar to Groupon.com, and restaurant-review app Dianping were nearing a combination that could create a business valued at more than $15 billion, citing people familiar with the situation.

Meituan's investors include online-shopping giant Alibaba Group Holding Ltd., while Dianping is backed by Alibaba's chief Internet rival, Tencent Holdings Ltd., an online games and social-networking company. Meituan and Dianping said that their decision to team up and create a new company was supported by Alibaba and Tencent, as well as venture-capital firm Sequoia Capital China, which has invested in both Meituan and Dianping.

The alliance between Meituan and Dianping comes as Chinese apps that connect users with brick-and-mortar services have been locked in a fierce price war to attract consumers by offering deep discounts. Some venture capitalists have questioned the strategy that relies heavily on subsidized discounts, saying such a business model wouldn't be sustainable in the long run.

Write to Juro Osawa at [e-mail]

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(END) Dow Jones Newswires

October 08, 2015 02:05 ET (06:05 GMT)

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