Tencent takes 20% Dianping stake

"The platform has successfully tapped into the surging middle class because of a hunger for more word-of-mouth recommendations on restaurants and entertainment venues," said Sun Mengzi, an analyst with IT consultancy Analysys International.

It ranke third among the country's group-buying vendors, following meituan.com and juhuasuan.com, Sun noted.

The deal is poised to give Tencent, the country's social networking and videogames superstar, more room to maneuver to integrate its 600 million users with the fast evolving payment functions embedded in its mobile chat app WeChat.

Users of WeChat can now access dianping's group-buying services and merchant information on their handsets, paying with Tencent's third-party payment tool Tenpay.

The purchase marks the latest wave of an industry-wide reshuffle as well-capitalized Internet companies snap up resources conducive to seamless online-to-offline deployment.

Tencent's archrival Alibaba Group Holding Ltd announced a full takeover of digital mapping firm AutoNavi Software Co Ltd last week as location-based services become the next focal point for business expansion.

The head-to-head competition also extends into the taxi-hailing market, where the duo heavily subsidized drivers and riders who opt for different mobile payment tools for the transaction.

Group-buying sites perfectly combine location-based services and offline vendor information. Dianping was the only option for Tencent given Alibaba's investment in meituan.com in 2011, said Zhao Nan, a professional blogger at TechWeb, an ICT information portal.

"Dianping is likely to ride to the rescue after Tencent-invested gaopeng.com, a similar daily deal site, failed to catch on," said Zhao.

Dianping can also leverage Tencent's extensive user-base to further penetrate the third- and fourth-tier cities and townships where huge business potential lies, said Zhao.

According to tuan800.com, a group-buying navigating website, the group-purchasing market expanded by 48.3 percent last year in major cities including Beijing and Shanghai, while in lower-end cities, the rate was 93 percent.

In a similar move, Alibaba launched mobile meal-order app taodiandian.com in 2013 to enable the ordering of restaurant dishes in advance of arrival, backed by navigation technology and mobile payment.

Its expansive business portfolio pushed up the value of shares of Hong Kong-traded Tencent by 121.07 percent by Wednesday from a year ago.

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