Meituan is buying a co-founder’s generative AI startup for almost $234 million, a deal that gets the food-delivery giant into a Chinese race to develop ChatGPT-like services.
(Bloomberg) — Meituan is buying a co-founder’s generative AI startup for almost $234 million, a deal that gets the food-delivery giant into a Chinese race to develop ChatGPT-like services.
Meituan agreed to pay that amount in cash while also assuming Light Year’s roughly 367 million yuan ($51 million) of liabilities, according to a stock exchange filing. The Chinese company will inherit about $285 million of cash.
Meituan now joins Chinese rivals from Baidu Inc. to Tencent Holdings Ltd. and Alibaba Group Holding Ltd. in a contest to develop generative AI services. That effort has attracted also a plethora of startups, scientists and former tech engineers inspired to delve deeper into the field after OpenAI’s ChatGPT took the world by storm in November.
“The acquisition enables Meituan to cumulate talents in large language models and deepen the exploration of generative AI opportunities ahead,” Jefferies analysts Thomas Chong and Zoey Zong wrote.
What Bloomberg Intelligence Says
Meituan’s proposed takeover of a co-founder’s AI entity, announced on June 29, to be made at a nominal amount after including acquired cash, signals the intensifying race among China’s internet giants, including Alibaba, Baidu, JD.com and Tencent, for new AI-led monetization opportunities from their extensive user data. For e-commerce businesses, more sophisticated user-exclusive shopping content and sourcing from such technology can spur growth as the digital penetration rate on the mainland hits a saturation point, we believe.
– Catherine Lim and Trini Tan, analysts
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Light Year, which was backed by Sequoia China (now HongShan), is an unusual acquisition for Meituan, which also provides online travel bookings and other commerce services.
The startup was the brain-child of co-founder Wang Huiwen, who this year declared his intention to get into the burgeoning effort to develop next-generation AI, reportedly staking $50 million of his own money. Meituan’s billionaire chairman Wang Xing joined in a round of funding for the firm about a month later, citing the pair’s 20-year partnership that included building the world’s largest meal delivery service.
But Wang Huiwen then encountered unspecified health issues that forced him to vacate his positions, the company said in a separate, Chinese statement. Meituan representatives declined to comment further on Wang’s condition on Thursday.
“We are acquiring leading AI technology and talent with this deal,” the company said in its statement. “That gives us the opportunity to strengthen and quicken our competitiveness in AI.”
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(Updates with analysts’ comment from the fourth paragraph)
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