Chinese food delivery giant Meituan said on Thursday (Jun 29) that it is acquiring artificial intelligence (AI) company Light Year from its co-founder and former director Wang Huiwen, in a bid to develop its own generative AI.

The deal comes at a time when AI has captivated investor interest across the globe, prompting a flurry of investments or acquisitions by businesses in a rush to develop generative AI like ChatGPT.

The total deal for Light Year includes US$233.7 million in cash with 366.9 million yuan (US$50.66 million) worth of debt and a payment of US$28 million to the AI firm’s previous investor HongShan, a investment fund by Sequoia Capital China Growth Fund VII, Meituan said.

The deal allows Meituan, in which online advertising giant Tencent holds an 18.7 per cent stake, to strengthen its position in the AI landscape of China.

Light Year, which had net cash of about US$285 million as of Jun 29, is involved in the research and development of large language models, and was founded and controlled by Wang who helped establish Meituan in 2010.

Wang resigned as the non-executive director of food delivery giant on Sunday due to health reasons.

Meituan will control 100 per cent of Light Year after completion of the deal.