The second largest app-based taxi aggregator in the US after Uber, Lyft was in talks with major companies for an acquisition. According to a report in ReCode, these discussions did not work out due to the $9 Billion price tag put forward by Lyft. However, the company has sufficient cash to operate as an independent entity and the talks were mostly a strategic step.
The report said that Lyft approached many top giants like Apple, Google, GM, Amazon and even its rivals, Uber and Didi for a possible acquisition. While the latter part of the report may well be taken with a pinch of salt, the former looks pretty convincing.
General Motors, the largest investor in the company was possibly the top contender. However, people familiar with the matter said that it never made a written offer and ultimately Lyft failed to find a buyer.
One would lead to think that Lyft might be facing an existential crisis which led to these talks. However, unnamed sources revealed that it had enough cash in its account ($1.4 billion to be precise) to carry on its operations comfortably while eyeing profitability.
The company recently revealed in a leaked letter to investors that it expected to set new records and had witnessed a six times growth in revenues between 2014 and 2015.
However, the acquisition talks signify the increasing pressure on Lyft especially after Uber is free from its cash sucking battle in China.
It is highly likely that after losing in China, Uber will channel its resources to further strengthen its position in the US and other emerging markets like India. This will further make things difficult for Lyft which is second to Uber in the US but by a huge margin.
Moreover, after Didi-Uber deal in China, the fate of Anti-Uber Alliance which Lyft had formed with Didi and others to combat Uber is also not clear. So, it makes sense that Lyft was looking for an acquisition or join hands with a big player to take on these challenges.
It is not the first time that such reports of acquisition of Lyft have emerged. Just a couple of months back, a WSJ report had said that M&A firm Qatalyst Partners was helping the aforementioned to either raise more money or go for an acquisition.
And the latest report also suggested that Qatalyst Partners was indeed involved in recent acquisition discussions with major companies. It remains to be seen how long does Lyft manage to carry on without a fresh funding or an acquisition.
Last month, co-founder John Zimmer, had also indicated the possibility of an overseas expansion which would mean a direct competition with Uber outside the US. For that, it will need a serious amount of cash resources which is only possible through a massive funding like Uber or acquisition.