According to the Wall Street Journal, Alibaba will sell its shares for about $900 million. It’s not a surprise that the Chinese e-commerce giant wants to offload its stake. According to an earlier report, Alibaba began negotiating the transaction when Meituan-Dianping was raising its mega-round in order to focus on Koubei, its rival online-to-offline (O2O) platform.
O2O—shorthand for strategies to get more online shoppers into brick-and-mortar businesses—is an important focus for China’s consumer Internet companies because much of it takes place on smartphones. If their O2O plans are successful, firms reap a multitude of benefits for their mobile businesses including more data about consumer spending and online usage habits.
Building O2O platforms, however, is a costly endeavor. Alibaba and its subsidiary Ant Financial invested $1 billion in Koubei last summer; like Meituan-Dianping, the platform also offers food delivery and deals at local businesses.
Once it goes through, Alibaba’s sale of its Meituan-Dianping shares will further its rivalry with Tencent, the Internet giant that owns WeChat, China’s largest messaging app. Tencent is one of Meituan-Dianping’s biggest backers and also participated in the $3.3 billion round.
The WSJ says Alibaba will sell its stake to investors, including some of the same ones who participated in Meituan-Dianping’s latest funding. The funding valued Meituan-Dianping at about $18 billion, but the parties who purchase Alibaba’s stake will pay a lower price that gives it a valuation of $12.5 billion because the older shares have less downside-protection rights.
An Alibaba representative said the company has no comment on the reported sale. TechCrunch has also contacted Meituan-Dianping and will update this post if we hear back from them.