The battle of Uber and Didi Chuxing is at its peak with both companies spending huge cash to capture the Chinese market. Earlier this week, a Bloomberg report suggested that investors of both companies wanted an end to that. And they were having talks for a tie-up in China.
However, Didi Chuxing has denied these speculations yesterday saying that there was no plan to tie up with Uber.
The Bloomberg report cited several people familiar with the matter who said that institutional investors in Uber were coercing the company to strike a deal with Didi. The people also said that investors in both companies have already discussed a potential deal. But it was on companies to arrive at a final decision on that matter.
In fact, the above-mentioned people also revealed that one Uber investor has had over 10 meetings with Didi shareholders. These shareholders apparently also wanted to ink a deal with Uber.
The rumors further gained strength after small meetings between senior executives of Uber and Didi over past few months. First, Didi President Jean Liu had met an Uber investor and board member named Bill Gurley during the Code Conference earlier this year.
Liu is also a frequent visitor to the US for meeting investors and exploring deals. Another person claimed that she had also met with Uber’s senior VP of business Emil Michael during those trips.
However, none of the persons mentioned above indicated that these talks exclusively revolved around a deal. But like it often happens in these situations, it was enough to start speculations.
Deal or no deal?
Didi Chuxing has put an end to these speculations for now. But if one thinks about it, it won’t exactly be a bad deal, particularly for Uber. It already has an upper hand over Uber with a much larger presence in China. But Uber is showing no signs of backing down and has been heavily investing in China despite huge losses.
In fact, it is reportedly spending over a billion per year in China. Uber admitted investing its profits from everywhere in the world in China. It does not even have any dearth of funds, thanks to its massive funding rounds one after another.
And when it comes to that, Didi has also become quite active in raising money and recently raised a staggering $7 billion in a funding round. Both Uber and Didi are bleeding this investor money to offer discounts to customers and incentives to drivers.
If a deal could happen, it can prove to be a boon for overall taxi aggregator segment but it might have an adverse effect on the monopoly of other cab aggregators like Ola, Lyft, etc. The Indian ride-hailing service has signed a global Anti-Uber alliance with Didi, Lyft, Grab and others to fight the American Uber. And Didi’s partnership with Uber will be in direct opposition of this deal.
However, after Didi’s clarification, it seems unlikely that both companies are in a mood to ink a deal in near future.