Baidu Inc.'s food delivery unit, Baidu Waimai, is rumored to be in deal talks with delivery giant SF Express. According to the rumors, the two companies may jointly establish a new company to operate the food delivery business and significantly expand its reach via SF Express' vast network. SF Express may also acquire a stake in Baidu Waimai, according to reports.
The deal talks are still on-going, and could change or be called off, according to Chinese media reports citing insiders. Baidu declined to comment when contacted by China Money Network, while SF Express did not immediately respond to inquires.
The pair began a partnership in June to cooperate on food delivery, in which SF Express helps deliver part of Baidu Waimai's orders during lunch-time rush hours.
Baidu Waimai is the third largest food delivery app and service provider in China, with a 17.3% market share, after Ele.me and Meituan Waimai, which have a 36.5% and 33% market share, respectively.
SF Express, one of China's largest express delivery firms, just completed a back-door listing earlier this year and is currently valued at RMB226 billion (US$33 billion). It has a network covering 331 cities across China and 13,000 SF Express storefronts, according to the company's 2016 annual report. Baidu Waimai, on the other hand, covers over 100 cities in China with 30 million users registered on its platform.
A partnership or a combination of the two makes strategic sense, and could create synergies and cost savings for both. But questions remain on how SF Express, as an express delivery firm focused on the business and high-end segments, can integrate Baidu Waimai's business to improve efficiency.
Internet giant Baidu is unwilling to give up control of Baidu Waimai, according to Chinese media reports. The food delivery unit is important in maintaining Baidu's reach among consumers who utilize its other services such as Baidu Map and Baidu's group-buying unit Baidu Nuomi.