Tencent and Alibaba merge fleet management daughters

Chinese giant Tencent and Alibaba have merged their fleet management daughters. G7 Connect, backed by Tencent, and its smaller competitor E6, backed by Alibaba, will retain their own brands and operations, but have agreed to become joint shareholders in a combined company. Both companies will seek synergies where their activities overlap.

The merger is happening ahead of G7’s planned initial public offering (IPO) on the Hong Kong stock market. The merged company will operate under the G7 name. Each of its investors (Tencent, GLP Pte, and Cainiao Smart Logistics Network Ltd -  an Alibaba company) will retain a 7-10% share in the company. 

The merger is something of a surprise, as Tencent and Alibaba have consciously built two very distinct business ecosystems. One exception is video platform Bilibili Inc., which is backed by both. The merged fleet management company will be a second one. 

Both companies use AI and IoT to manage freight and logistics, sensors and cameras to capture data, ADAS to counter bad driving, and real-time cargo weighing to prevent theft. 

Before the announcement, G7 was valued at $2.2 billion, with E6 worth about 70% of that. The company operates more than 2 million trucks using 2.3 million drivers, and serves more than 40,000 logistics customers. G7 has ventured into transaction services in areas including settlement, insurance and equipment; these now account for 70% of its revenue. 

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