China’s Meituan said to agree to $15 billion Dianping merger

Two Chinese startups separately backed by Alibaba Group Holding Ltd. and Tencent Holdings Ltd. have agreed to a merger that will create a $15 billion provider of local services like restaurant reviews and movie bookings, people with knowledge of the matter said.

The merger of Meituan.com, a group-buying site part-owned by Alibaba, with Tencent-backed consumer-reviews service Dianping.com may be announced as soon as Thursday, the people said, asking not to be identified because the information is private.

China’s largest Internet companies are investing heavily in the $1.6 trillion online-to-offline services market, chasing anticipated growth in local on-demand services ordered up via smartphones, including car rides and restaurant bookings. An Alibaba-Tencent tie-up would mirror the creation of Didi Kuaidi this year via a merger of two competing taxi-hailing apps they separately backed.

Spokesmen for Alibaba and Dianping declined to comment, while a representative for Meituan said the company can’t immediately comment. A spokeswoman for Tencent didn’t immediately respond to a mobile-phone text message and e-mail seeking comment during a public holiday in China.

The combined company may pose a threat to Baidu Inc., which is investing $3.2 billion over three years in its own provider of local services. Meituan recently completed a funding round that valued the company at about $10.5 billion, after originally seeking as much as $15 billion, one of the people said.

The Wall Street Journal reported earlier Wednesday in Hong Kong that Dianping and Meituan were nearing a merger, citing unidentified people.