(Reuters) - Chinese e-commerce giant Alibaba Group Holding Ltd (BABA.N) said on Monday it would buy the remaining shares of Ele.me, a major platform in China’s food delivery market, as it competes with Tencent Holdings Ltd (0700.HK) services for offline consumers.

Drivers of the food delivery service Ele.me prepare to start their morning shift after an internal security check in Beijing, China, September 21, 2017. REUTERS/Thomas Peter

Alibaba and affiliate Ant Small & Micro Financial Services Group Co Ltd currently own approximately 43 percent of Ele.me, and the latest deal will value the startup a $9.5 billion, said Alibaba in a statement.

FILE PHOTO: A sign of Alibaba Group is seen during the fourth World Internet Conference in Wuzhen, Zhejiang province, China, December 3, 2017. REUTERS/Aly Song/File Photo

Ele.me, which roughly translates as “Hungry?”, is part of a fast-growing and competitive e-commerce market in China driven by consumers eager to use smartphones to make purchases from groceries to cinema tickets.

In August Ele.me bought major rival Baidu deliveries from Baidu Inc (BIDU.O). For Alibaba, the latest acquisition enlarges the e-commerce firm’s food delivery empire, which also includes delivery platform Koubei, as it competes with Meituan Dianping, backed by Tencent Holdings Ltd (0700.HK).

Alibaba and Meituan are both investing heavily in offline services, including deliveries, mobile payments and unstaffed stores, to tap a wider demographic as China’s online commerce market shows signs of slowing.

Ele.me will continue to operate under its own brand following the acquisition, said Alibaba, but will combine some functionalities with Koubei.

As part of the deal Alibaba will install Alibaba Vice President Wang Lei as chief executive at Ele.me, while the current chief executive and founder of Ele.me will become chairman and serve as a special advisor to Alibaba on new retail strategies.

Reporting by Cate Cadell in BEIJING and Ismail Shakil in BENGALURU; Editing by Sunil Nair

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