Alibaba’s Lazada confirms acquisition of Singapore web grocery startup RedMart

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Last week, we reported that Lazada, the e-commerce platform in Southeast Asia backed by Alibaba, was in talks to acquire online grocer RedMart, and today the companies confirmed the deal.

Our sources said Lazada, which took a $1 billion investment from Alibaba earlier this year, is spending $30-40 million to buy Singapore-based RedMart. Given that RedMart had raised more than $55 million from investors, which include Facebook co-founder Eduardo Saverin, that price range is pretty underwhelming for a company that many had tipped for a major exit.

Officially, though, the deal is undisclosed and scheduled to be completed before the end of this year.

RedMart had run into financing problems, and had been working with banks to find a buyer since at least September, according to a report from Bloomberg. (That’s similar to Lazada’s situation — it ran out of cash before Alibaba stepped in with an offer.)

In a press release, RedMart stressed that it will continue to be run independently of Lazada despite this transaction. The company said that this alignment will help it expand into new product categories faster. RedMart currently operates in Singapore but it has long harbored expansion ambitions. Lazada is in six countries in Southeast Asia, but there’s no word on whether it will help RedMart expand into new geographies following this deal.

“This partnership will help us to increase the scale at which we are able to deliver our mission to save our customers time and money for the important things in life… We are partnering with Lazada to serve our customers better,” RedMart co-founder and CEO Roger Egan said in a statement.

Amazon plans to introduce its Prime e-commerce service and grocery deliveries to Singapore, its first market in Southeast Asia, in Q1 2017, so Lazada and RedMart will need to brace themselves for some serious rivalry very soon.

As we reported last week, Amazon was actually a RedMart suitor earlier this year but the U.S. retail giant bid even less than $30 million, which scuppered a potential deal. Amazon is building up its own capabilities itself instead.