(Chinese Version)

Not long ago, Meituan and Dianping co-announced their strategic cooperation by establishing a new company, which aims at becoming an advanced O2O platform in China. (If necessary, please refer to the previous report from TMT post.

The new company will adopt a Co-CEO system, under which Wang Xing, CEO of Meituan and Zhang Tao, CEO of Dianping, will be Co-CEOs and Co-Chairmen of the new company. While big decisions will be made by a new board, Meituan and Dazhong still keep their original structures, brands and businesses, including their special on-shop services. The merge of Meituan and Dianping is believed to create a new force in mutual complementarity, strategic synergy and industry upgrading.

The merge between Meituan and Dianping won a lot of support from their stockholders, such as Alibaba, Tencent and Sequoia Capital. China Renaissance acted as an exclusive financial consultant during for the two companies during the merge.

Zhangtao, CEO of Dianping, states that although Meituan and Dianping have different businesses, they compete a lot in the overlapping part. It is a common goal for two companies to connect more than 10 million sellers with 1 billion customers and that is why cooperation is an inevitable trend for us. O2O is blessed with incalculable opportunities and the cooperation will help us to better fulfil our advantages, facilitate product innovation and expand our business. It is our common obligation to provide more value for both sellers and customers, promote the development of O2O environment and even the whole industry.

Wangxing, CEO of Meituan, states that it is quite a pleasure to cooperate with Dianping. Meituan will have more opportunities to better service both sellers and customers, expand new business and innovate on its products. Such cooperation is a common goal for both sides and will surely create a new force. I have confidence in the future of our new company.

So far, Dianping has received six rounds of financing, with 850 million dollars in the latest round. Meituan has received five rounds of financing, with 700 million dollars in the fourth round and an estimation of 7 billion dollars of its market price.

There is estimated to be another round of financing for the new company, its market value be more than 15 billion dollars. The stockholders plan to put their shares in the new company (still using the VIE structure) with a ratio of 1:1 (not 7:4). Details still remain to be revealed by two companies.

Wang Xing and Zhang Tao shared their internal mails. According to Wang, it’s not hard to turn enemies into friends. He is more than willing to maintain their cooperation. Such abrupt change might bring some discomforts for both sides, but since they are now friends, Wang will surely appreciate their friendship.

Zhang points out that the merge between two companies is an iconic strategic cooperation in the history of China Internet. The landscape of O2O in China will change as a sequence.

The following are the financing records and Internal emails of Meituan and Dianping respectively: 

Six rounds of financing for Dianping

• 1 million dollars investment from Sequoia Capital in 2006;
• 4 million dollars investment from Google in 2007;
• 100 million dollars investment from Trust Bridge Partners, Sequoia Capital, Qiming Venture Partners and Lightspeed Partners in 2011;
• 60 million dollars investment in the fourth round 2012;
• 400 million dollars strategic investment from Tencent in 2014; Tencent gained 20% of share;
• 850 million dollars investment from Tencent, Temasek Holdings, Wan Da Group and Fosun Group.

Four rounds of financing for Meituan

• Seed investment from Wang Jiang in March, 2010;
• 12 million dollars investment from Sequoia Capital in August, 2010;
• 50 million dollars investment from Alibaba and Sequoia Capital in July, 2011;
• In May, 2014, Meituan received an investment of 300 million dollars from General Atlantic, Sequoia Capital and Alibaba, with an estimation of 4 billion dollars of its market price;
• In January, 2015, Meituan received an investment of 700 million dollars, with an estimation of 7 billion dollars of its market price.

Internal email from Meituan

Dear all,

In the 66th National Holiday of China, Meituan and Dianping has achieved an iconic strategic cooperation in the history of China Internet. A new company is born and the landscape of O2O in China will change as a sequence. We might be rivals yesterday but now we’ve become friends. For sure, we will build an ever bright future.

Meituan and Dianping will still maintain their independent businesses and Mr. Zhang and I will be the Co-CEOs of the new company. Our cooperation is highly supported by our stakeholders, including Ablibaba, Tencent, Sequoia Capital, Boyu Capital, Hillhouse, GA, Fidelity, Northern Light Venture Capital and Walden International and I really appreciate that. I believe that our cooperation will help both sides to enhance strengths, facilitate teamwork and maintain the rights of employees.

Meituan came into market on March 4th, 2010. In the past five years we have achieved a lot through strong teamwork. Meituan and Dianping together expanded the O2O market in China and brought conveniences to millions of customers. Our cooperation will surely raise the O2O market to a new level, on which we will be able to better our product innovation, business expansion and customer experience. It is these opportunities that bring us together.

It’s not hard to turn enemies into friends. I am more than willing to maintain our cooperation. Such abrupt change might bring some discomforts for both sides, but since we are now friends, we should appreciate our friendship by discarding oppositions and sparing no appraisal to each other. It takes bosom and patience to achieve that.

However, we should also bear in mind that cooperation is no guarantee for success, because the competition is fierce and unpredictable in our industry. The O2O market in China is still immature, which requires us to keep a humble mind and strive to provide better service for sellers and customers.

Let’s discard our perceived prejudice and go for a better future.

By Wang Xing

Internal mail from Dianping

Dear all,

In the past vacation, we have successfully reached an agreement with Meituan and a new company is born. The merge between two companies is an iconic strategic cooperation in the history of China Internet. The landscape of O2O in China will change as a sequence. Though we were rivalries yesterday, we’ve realized the great opportunities in the O2O market and decided to join hands in creating a brighter future. 

Wang Xing and I will be the Co-CEOs of the new company but we will still keep our independent businesses, including key services like group-purchasing and on-shop discount. We shall keep our independence while achieve strategic synergy and a win-win situation. I believe that our cooperation will help both sides to enhance strengths, facilitate teamwork and maintain the rights of their employees.

Our cooperation is highly supported by our stakeholders, including Ablibaba, Tencent, Sequoia Capital, Trust Bridge Partners and Capital Today. I really appreciate their long-time support and trust.

Dianping is twelve years old now. We never forget our purpose as to innovate on products and better service sellers and millions of users. We created a third-party-comment mode in our App, online coupon, reservation service and on-shop discount. In the past five years, we competed really hard with Meituan but it is such competition that urged us to develop fast. Now we’ve gained more than 200 million users and 1 million sellers. I would like to take this opportunity to express my gratitude towards every DPer. Thank you for your effort and wisdom that make Dianping a better company. Let’s pride on our past achievement and fight for a brighter future. 

There are great opportunities in the O2O market and we are proud of being part of something so spectacular. We bear the mission of history as well as an opportunity to extract more from O2O market. The cooperation will give us more room in product innovation and business expansion. Meituan and Dianping have settled a good foundation for the O2O industry and I believe that our new company will bring more conveniences to sellers and costumers. Our success lies in the mutual trust between two different teams and let’s discard past prejudice and join hands in creating a better future.

New company, new start and new opportunity. Let’s go for a better future!

By Zhang Tao

[The article is published and edited with authorization from the author @TMTpost-Chinese, please note source and hyperlink when reproduce.]

Translated by Jack Jia (Senior Translator at ECHO), working for TMTpost.