Two of China’s largest taxi-hailing apps to merge

Two of China's largest taxi-hailing applications, backed separately by Alibaba Group Holding and Tencent Holdings, announced yesterday that they would merge, Forbes reported.

The new company would have a dual-leadership setup. According to a statement today 14 February, Cheng Wei, chief executive of the Tencent-backed Beijing Xiaoju Keji and Lv Chuanwei, chief executive of Alibaba-backed Hangzhou Kuaidi Technology, would be co-CEOs of the new firm.

The size of the stakes Alibaba and Tencent would hold in the combined company was not clear.

''The two taxi-hailing apps will retain their brands and independent businesses,'' the statement said, adding that a press event would be held after the Chinese New Year.

With the announcement, days of speculation would come to rest. According to a report in The Wall Street Journal on Thursday, Didi Dache and Kuaidi Dache were in advanced merger talks, but the shape of the deal remained flexible.

Tencent would be the largest shareholder in the new company, valued at $6 billion, according to a Bloomberg report yesterday.

The merger would bring the battle between Alibaba and Tencent to win customers to an end.

It would also create a dominant player in China's burgeoning taxi-hailing market. Last year, the two internet companies spent billions of yuan to help the apps they backed offer discounts to customers and rewards to drivers, however, concerns grew that Alibaba and Tencent were locked in an unwinnable war.

Meanwhile, according to the firms, which had not yet announced a name for the combined entity, they would operate independently under separate brands, Reuters reported.

Didi chief executive Wei Cheng and Kuaidi chief Dexter Chuanwei Lu would be co-chief executives. They would formally introduce the new business after the Lunar New Year, which begins on 19 February, the companies said.

Didi and Kuaidi, backed by Chinese Internet giants, had been warring over price for the past year as each sought to corner the massive Chinese market despite rumors of mounting losses.

According to a study conducted in December by Analysis International, Didi was estimated to have around 55 per cent market share, with Kuaidi claiming nearly all of the rest.

The two companies had been locked in a battle for their share of the largest transport market. More than 150 million Chinese hail taxis using their smartphones, analysts said. They had received over $1 billion from private investors in recent months to sustain their battle for market share.