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Alibaba-backed startup to buy Baidu's food delivery service

Familiar rivals left standing in hotly contested market in China

SHENZHEN -- The Alibaba-affiliated leader in China's online food delivery market will acquire Baidu's service, winnowing the field down to two in yet another emerging sector.

Rajax Holding, backed by Alibaba Group Holding, operates popular food delivery app Ele.me.  In a deal announced Thursday, Rajax will purchase Xiaodu Life Technology, which runs the Baidu Waimai app. The sale is reportedly valued at roughly $800 million.

Ele.me boasts some 34 million users, followed by Tencent Holdings' Meituan Waimai at around 30 million and Baidu Waimai at about 17.5 million, according to market research firm Analysys International.

The three companies control about 90% of the market. The sale would leave the market with essentially two competitors, though the Baidu Waimai brand will continue to operate.

Since 2016, China's food delivery apps have exploded into a 113.3 billion yuan ($17 billion) market thanks to their convenience.

This sale is just another instance of the ongoing proxy battle between internet giants Alibaba and Tencent, as they invest in promising startups.

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