China's largest provider of on-demand online services is buying bike-sharing firm Mobike for $2.7 billion U.S. excluding debt, in a deal that will intensify the rivalry of their common backer Tencent Holdings (OTC: TCEHY) with Alibaba Group (NYSE: BABA)
Meituan Dianping announced the deal on Wednesday but did not disclose the value of the deal. Two sources told Reuters the equity value of the deal was $2.7 billion.
The deal consolidates the resources of the two firms, which are backed by Chinese gaming and social media giant Tencent, as Mobike faces off against Alibaba-backed Ofo, which also counts ride-hailing firm Didi Chuxing as a major investor.
The two bicycle-sharing companies have waged a costly war of subsidies in a bid to win the Chinese market as well as overseas markets.
Earlier this week, Alibaba said it would assume full control of Chinese food delivery platform Ele.me, a rival to Meituan.
Mobike, which counts over 30 million rides a day, will maintain its brand following the deal and keep its current management team, Meituan said.
Alibaba shares backed down $5.87, or 3.4%, Wednesday to $168.80, within a 52-week trading range of $106.76 to $206.20. Tencent, for its part, dropped $1.54, or 3%, to $50.70, within a range of $28.90 to $61.36.
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