Alibaba and Tencent Backed Rival Chinese Taxi Hailing Apps Announce a $6B Tie-up

Image Source: TechCrunch

Image Source: TechCrunch

To create one of the world’s largest smartphone-based transport services, Chinese taxi-hailing apps  Kuaidi Dache and Didi Dache have confirmed that they will merge. Financial details were undisclosed but analysts estimate the value of combined entity at around $6 billion. This move is aimed at global expansion.

The firms have not announced a name for the combined entity, would operate independently under separate brands. Both companies will combine resources and talent to build a better platform for the transportation industry. The chief executives of both companies, Chuanwei Lu of Kuaidi and Wei Cheng of Didi, will become co-CEOs of the merged entity.

Kuaidi and Didi, are backed by Chinese internet companies Tencent Holdings Ltd and Alibaba Group Holding Ltd respectively, and both have raised significant amount of capital. Hence these move comes as a surprise since the investors of both the companies are rivaling each other in China.

Didi Dache closed a $700 million funding round from Tencent and Russian private equity fund DST in December 2014, while Kuaidi Dache secured $600 million from backers including Softbank and Tiger Global this January.

The firms are directly competing with global cab aggregator Uber which raised  $1.2 billion series E funding in December 2014 at a $40 billion valuation, and $1.6 billion in convertible debt from Goldman Sachs’ wealth management clients in January this year. Also, in order to boost its market share in India, US-based on-demand car service Uber is looking to acquire a home grown radio taxi service Meru Cabs which is currently valued at around USD $400 million.

Both companies also said that they will reveal more information at a press conference that will be held after the Lunar New Year.