Chinese social e-commerce player Mogujie said Tuesday it will take over rival Meilishuo and form a new company with annual sales of about $3 billion.
Both Mogujie — Mushroom Street in English — and Meilishuo — Beauty Talk — are female-focused platforms that visually bear a striking resemblance to Pinterest, but with a much more direct e-commerce component, with easy click-through from posted images to points of purchase.
The deal will see Mogujie acquire Meilishuo — which is backed by Chinese internet giant Tencent — through a 2:1 share swap and Tencent will increase its shareholdings of the new company, according to a statement from Mogujie.
Mogujie’s cofounder and chief executive Qi Chen — a former “Ali Ren,” as Alibaba employees are colloquially known — will helm the new enterprise, Mogujie said.
The two companies registered combined annual sales of 20 billion yuan, or a little more than $3 billion at current exchange, last year.
Hangzhou-based Mogujie completed its latest round of fund-raising last November, raising $200 million from investors led by Ping An Ventures, according to statements from the company at the time.
The takeover comes at a time when consolidation is becoming the norm for China’s tech start-ups. A proliferation of competition and a scarcity of funding as China’s unsettled economic situation weighs on investor sentiment is making mergers and acquisitions a common occurrence.