Meituan.com, a group-buying site backed by Alibaba Group Holdings Ltd and consumer review service Dianping.com, which is funded by Tencent Holdings Ltd, said in a joint statement that they have struck a strategic merger. [Photo/IC]

Two of China's largest online-to-offline service providers announced a merger on Thursday, in a move to end their escalating battle to win customers and corner the market.

Meituan.com, a group-buying site backed by Alibaba Group Holdings Ltd and consumer review service Dianping.com, which is funded by Tencent Holdings Ltd, said in a joint statement that they have struck a strategic merger.

The new company will run on a co-CEO basis and keep the original structure of their respective human resources. Meituan and Dianping will continue to run their businesses in parallel, retain their brands, and remain independent.

Zhang Tao, CEO of Dianping, said "Cooperation is the big trend. We will leverage our own resources to help 10 million restaurants better serve one billion consumers."

According to a report from Beijing-based Internet Consultancy Analysys International, the online-to-offline service market in China is worth $1.6 trillion dollars.

Wang Xing, CEO of Meituan, said, "The tie-up matches the expectation of our team and investors. It will afford us more time and energy to explore new businesses and make better innovative products."

It is not immediately clear what the equity ratio of the new company will be. But it is expected to be a strong competitor to Baidu Inc, which promised to invest $3.2 billion over three years in its own brand of O2O services.