r/baba
Alibaba Bids $1.5 Billion for China Grocer in Fight With Meituan
Alibaba bids $1.5B for Pupu to fight Meituan, but author warns ByteDance's competition will drain BABA's cash flow and lower valuation.
- Alibaba's $1.5B bid for Pupu signals intensifying 'involution' and cash burn in the grocery delivery sector.
- Endless price wars and competition, especially from ByteDance, could drain Alibaba's free operating cash flow.
- Depletion of cash and marketable securities on the balance sheet will lead to a lower valuation for BABA.
Alibaba Group Holding Ltd. is offering $1.5 billion to acquire Chinese grocery delivery firm Pupu, initiating a bidding war as part of a broader campaign to wrest market share from Meituan in online commerce.
China’s largest consumer internet platform’s proposed price is more than double an earlier bid from Sun Art Retail, according to people familiar with the matter. Sun Art, a former Alibaba affiliate that’s now backed by private equity firm DCP Capital, had proposed a takeover at $600 million, the people said, asking not to be identified because the sale process is confidential. Alibaba’s proposal emerged just months after Meituan announced a $717 million acquisition of Dingdong Fresh Holding Ltd., after beating out rival bidders.
So food delivery involution (内卷) expands towards Grocery Delivery?
As i have always/consistently said, the penultimate competitor is ByteDance (Zhang Yimin).
Why is BABA not focusing on dealing with him straight up?
Zhang Yimin will really 卷 until Alibaba have no more Free Operating Cashflow and you can zero-out whatever cash or marketable securities on their balance sheet.
That then just simply revalues BABA at a lower price point.
He wouldn't let go or concede to Baba, just no way.