OFFICIAL: Groupon’s China Business Merges With FTuan

Exactly as we’d heard was about to happen in recent rumors, it has just been announced officially that Groupon’s (NASDAQ:GRPN) joint-venture in China with Tencent, called Gaopeng, will merge with its larger daily deals rival FTuan.

The whole deal was overseen by China’s web giant, Tencent (HKG:0700), which not only owns half of Gaopeng but also has an undisclosed stake in FTuan. The financial deals of the merger have not been revealed. Groupon will be a minority shareholder in the new company, as it was in Gaopeng – but we’re not sure how “minor” it now becomes.

The merger will create a new company that’ll be headed by FTuan’s CEO, Lin Ning, but means that the two Gaopeng and FTuan brands and websites will continue as they are.

In this evening’s announcement, the new entity’s CEO, Mr. Lin, said:

China’s daily deals market is moving from investment-driven to operation-focused, and I believe the merger will position us well to further scale our operations and deliver innovative products to our customers. The multi-brand strategy after the merger will enable the new company to serve the segment needs of merchants and consumers in lifestyle e-commerce and mobile internet.

It is indeed the first major deal we’ve seen in China’s fragmented and costly daily deals market, where the current market leader is the startup Meituan. FTuan was in fourth eighth place last time we looked, while Gaopeng was still losing market share way out of the top ten.

Tencent’s new CEO of its recently spun-off e-commerce division said:

The new joint entity will combine the strengths of FTuan and Gaopeng to better serve consumers in the daily deals market in China. We believe group-buying is a natural leverage off our large user base.

Meanwhile, Groupon’s Jason Harinstein, commented:

For Groupon, this transaction is the next logical step in our strategy to strengthen our investment in China. Tencent has been a great partner, and we are excited to continue our partnership with them. We are also looking forward to working with the FTuan team to provide Chinese consumers and merchants with more compelling offerings.