Mogujie, a Chinese fashion-focused e-commerce services has announced its acquisition of its market competitor Meilishuo and aim to create a new company valued to be around $2.5 billion. The financial terms of the deal has not been disclosed.
Founded in 2011, Mogujie is buyer-based social network service that offers services to female internet users in China. Two months ago, the company raised $200 million in its new round of funding led by Ping An Ventures, the venture capital arm of Ping An Insurance, China.
Further to the acquisition, the soon-to-be-created entity intends to secure funds after closing the deal and its valuation could rise to nearly $3 billion. Chen Qi, CEO of Mogujie would take over the position of CEO of the new company. It is also said Tencent, which backed up Meilishuo will go on to be the strategic investor of the combined company. The takeover of Meilishuo will create a dominant player among services that specialize in women’s fashion and combine online shopping with social networking.
Both the companies, Mogujie and Meilishuo operate platforms that brings together shopping with social networking, while focusing on women’s fashion. This merger deal continues the streak of high-profile mergers and acquisitions in the startup sector. As Venture capitalists and other investors become more careful these days about putting high price tags on companies that are using through cash to compete with rivals, startups in China are under pressure to looking at options of joining hands with competitors.