Chinese food delivery giant Meituan has agreed to acquire all shares of Light Year, a nascent artificial intelligence (AI) company, from its founder Wang Huiwen and shareholders including HongShan.
Meituan plans to acquire the entire interest in Light Year in a deal consisting of almost $233.7 million in cash and over 366.9 million yuan ($50.7 million) worth of debt, the firm disclosed in a filing with the Hong Kong stock exchange on Thursday.
The cash consideration of $233.7 million includes a $28-million payment to HongShan, previously known as Sequoia Capital China, which holds a 2.44% stake in Light Year; as well as a $5 million payment to an investment vehicle wholly owned by Meituan’s founder and CEO Wang Xing for his 0.43% stake, according to the filing.
The acquisition of Light Year will provide Meituan with “the opportunity to strengthen its competitiveness in the fast-growing AI industry,” said the firm.
Meituan will control 100% of Light Year upon the completion of the deal.
The move marks Meituan’s official entry into the development of generative artificial intelligence (AI), following its domestic peers including Baidu, Alibaba Group, Tencent, and JD.com, all of which announced plans earlier this year to build their own versions of ChatGPT to capture a sudden boom of this technology in the domestic market.
Meituan’s disclosure comes just a few days after Light Year’s Wang, who had helped establish Meituan in 2010, resigned from his position as a Meituan non-executive director and two other titles at the firm due to personal health reasons, the firm disclosed in a separate filing on June 25.
Wang first introduced Light Year to the public in February when he posted recruitment information online looking for top AI R&D talent as he planned to build “China’s OpenAI”.
Wang wrote in the post that Light Year, incorporated in Beijing, was built with a $50-million initial investment out of his own pocket at a valuation of $200 million and that the startup already secured a $ 230 million commitment to its next funding round from “top VC(s)”.
In April, Light Year acquired One Flow, which specialises in the R&D of large language models, through a stock swap.