Analyzing The Motivation And Performance Of Ele.me’s Wholly-Owned Acquisition By Alibaba

Relying on economic development and technological change,the Internet industry has been developing at an amazing speed,riding the tailwind of "Internet +".At the same time,a wave of mergers and acquisitions has been set off in the Internet industry,and mergers and acquisitions activities among Internet enterprises are increasing day by day.Studying the motivations and performance of mergers and acquisitions of Internet enterprises is helpful to analyze the value of mergers and acquisitions of Internet enterprises.In April 2018,Alibaba,Ant Financial and Ele.me announced that Alibaba,together with Ant Financial,would acquire Ele.me for $9.5 billion,making Ele.me the core business of local consumer services in the new retail ecosystem.The acquisition is one part of the important layouts for Alibaba to further enrich the new retail ecology,and it also created the highest M&A price in the Internet industry,which has been widely noticed by the market.Even though it has acquired the control right,Alibaba still chose to buy Ele.me with a large sum of money.Its motivation and actual performance impact are worth further exploration.This paper takes the case of Alibaba ’s wholly-owned acquisition of Ele.me as the research object,and analyzes the merger motivation and performance of the case,based on the overview of the subject of the merger.This paper holds that Alibaba hopes to improve its strategic layout and preempt user traffic through m&a,to obtain "1+1 > 2" synergies.In terms of performance analysis of mergers and acquisitions,short-term performance analysis is carried out by using the event research method.Data analysis of the stock price changes of Alibaba is carried out using [-15,15] as the event window,and the cumulative excess return rate during the event period is-8.04%,indicating that the merger and acquisition event has brought negative shortterm performance impact to Alibaba.In addition,from the perspective of basic financial performance analysis,Alibaba’s growth ability,debt paying ability,profitability and operating capacity are analyzed,found negative effects of the M&A to Alibaba,but with the integration of ecological,Ele.me has played a driving role in improving the overall ability of Alibaba.Finally,in view of the particularity of the Internet industry,this paper conducts a study from the perspective of non-financial performance,and demonstrates the positive impact of the merger activity on Alibaba from the aspects of infrastructure,market share and strategic ecological layout.In general,the acquisition has brought positive performance to Alibaba.At last,four enlightenments related to the acquisition and development of Internet enterprises are obtained.