Skadden, Arps, Slate, Meagher & Flom and Davis Polk & Wardwell are advising on a merger of two subsidiaries of Tencent Holdings Ltd. and Alibaba Group Holdings Ltd. that will create a leading player in China's increasingly important online-to-offline services market.

Tencent-backed Dianping.com, China's answer to Yelp, and Groupon-like Meituan.com, have set up an as yet unnamed new company but will retain their respective brands and management structures and continue to operate their businesses independently. The new company is reportedly worth $15 billion, according to The Wall Street Journal, who cited a person familiar with the matter.

The arrangement is similar to last February's merger of Chinese taxi-hailing companies Didi Dache and Kuaidi Dache, which are also backed by Tencent and Alibaba, respectively. Also, Shanghai-based Dianping and Beijing-based Meituan have been in a similar battle for customers as Didi and Kuaidi, slashing prices to attract customers as Chinese consumers increasingly use smartphones to purchase offline services such as hotel rooms and grocery deliveries.