Taxing hailing service Uber is in talks with radiocab service provider Meru Cabs for a possible buyout of a majority stake in the Indian company, said a report in The Economic Times.
The move signals consolidation in the taxi service space and comes soon after Ola Cabs' buyout of TaxiForSure.
According to the ET report citing sources, Meru is looking at a valuation of $400 million and India Value Fund Advisors, which owns 80 percent in the company, wants to hold a minority stake in the event of a selloff.
However, the report has no confirmation of the development from both the companies.
Meru, the first radio taxi service in India, is in need of more funds to keep up with the heightened competition in the organised taxi market. Its founder and managing director Neeraj Gupta has been quoted as saying in a report in the Business Standard yesterday that the company was looking at raising "$100-150 million to fund expansion needs and technology upgrades".
The company had last month entered the Odisha market. Another report in the Business Standard said with its Odisha launch, the company expanded its presence into 15 cities. It has a market share of 45 percent and has presence in Delhi, Uttar Pradesh, Maharashtra, Rajasthan, Gujarat, Karnataka, Andhra Pradesh, Telengana, Tamil Nadu and West Bengal, the report said.
Uber, meanwhile, has been in the eye of a storm after the rape incident in Delhi, which brought its services under regulatory scrutiny.
Its services has been banned in New Delhi ever since and the Delhi transport authority said the company's recent application for licence lacked required information such as the details of its call centre and the proof of its registered office in Delhi.
Though the authorities in Delhi have said that they will not allow the company to operate, its services are still available in the city, media reports say. However, it will have to apply for the licence again.
The buyout is likely to be a win for Uber because Meru can help it overcome the licence trouble with immediate effect. It will also be able to leverage on the brand Meru, which is an established one in major cities. Uber is said to have a presence in about 10 cities in India, which makes the country its largest market outside the US.
Updated Date: Feb 03, 2015 12:20:40 IST