Taking on Uber: SoftBank-backed Olacabs may buy out TaxiForSure for $200 mn
Apart from taking on the $40 billion Uber, the move is also aimed at lowering the cost
Taxi aggregators are readying themselves to take on the global giant Uber, once the regulatory issues are cleared in India.
Olacabs, the Indian startup supported by Japan's SoftBank is buying its rival TaxiForSure, say media reports, signalling consolidation in the nascent taxi app market. Both the companies have, however, refused to comment on the development. Key investors in TaxiForSure include Accel Partners and Qualcomm.
The deal, which is estimated to be worth around $200-250 million, will be the second largest deal in the consumer internet space after Flipkart's $370 million acquisition of Myntra, say the reports.
It will make Olacabs the leader in taxi aggregator business in India valued at $2 billion, said a report in The Times of India.
Ola is likely to pay cash and also offer stock to acquire TaxiForSure, another report in the The Economic Times said.
"The term sheet has been signed and in the next 10 days the finer details will be chalked out," one of the three unnamed sources has told the newspaper.
Apart from taking on the $40 billion Uber, the move is also aimed at lowering the cost, the report said.
Globally too taxi aggregators are in talks to form an international alliance against Uber, potentially linking up regional players including Olacabs, Singapore's GrabTaxi, and San Francisco-based Flywheel.
Though, none of the Indian taxi aggregator companies have started making profit yet, TaxiForSure, run by Bangalore-based Senrendipity Infolabs, seems to be in urgent need for financial support.
According to the ToI report, the company had raised a bridge round of $20 million from the existing investors recently. The fund raising had valued the company at $125 million. The company had also held discussions with Uber, Carzonrent and Meru for a possible sell out, the report said.
A report in the Business Standard citing filings with registrar of companies had earlier noted that net loss of ANI Technologies, which owns Ola, widened 50 percent to Rs 34.21 crore in 2013-14. Meanwhile, Serendipity swung into a loss of Rs 17.08 crore from Rs 3.02 crore profit it made in the previous year.
Analysts have welcomed the buyout move saying it will boost the competitive power of both the companies.
"This will be problematic for Uber because it does not have any offline presence and no stated plans of being in that space," Sunil Wattal, who teaches management information systems at Temple University in the US, has been quoted as saying in ET report.
Meanwhile, in an indication of continuing trouble for app-based taxi hailing companies, the Delhi Transport Authority, which was the first to ban such services in India, has found the licence application submitted by Ola, Uber, TaxiForSure and NTL Call Cabs deficient.
According to a report in the Business Standard, the authority has sent notices pointing out the gaps. “It will take at least 10 days for companies to fill in all the gaps in the applications, which will then be reconsidered by the department,” a government official has been quoted as saying in the report.
According to the report, Ola has maximum number of deficiencies while TaxiForSure has only one.
The acquisition move, however, indicates that the companies are expecting to survive the regulatory scrutiny. India's taxi market is estimated at $10 billion and only a minuscule part of it is organised.
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