The Brazilian rival of Uber – 99, would be taken over by the Chinese ride-sharing company - Didi Chuxing. The Chinese company already holds a stake in the Brazilian company and the deal is slated to be around $600 million, according to media reports.
Especially for Uber and Didi which are the two of the largest players in the global ride hailing industry, the deal – to be made in all-cash would fundamentally alter the industry’s competitive dynamics. The fast growing ride hailing markets of South America, including Brazil, are viewed as prize catches for both the companies as they tussle with each other to dominate the markets – wherever possible.
The financial details of the deal were not disclosed by Didi even though it confirmed the deal.
While the companies are at logger heads in Latin America with the purchase of the Uber competitor in Brazil, there are many markets, including China where the two companies are working together.
The deal also indicates that Didi now wants to spread its wings outside of China as well. And this expansion plan has been boosted by a $4 billion funding round in December that was led by the Japanese conglomerate SoftBank.
According to sources with knowledge as quote din the media, around 30 percent of stake in 99 was owned previously by Didi. Sources reportedly said that the Sao Paulo based 99 has been working closely with the technology and engineering team from Didi already in Brazil.
Sources said that Didi now has to pay up around $600 million to purchase the remain shares in 99 and to take complete control of the Brazilian ride hailing company. Some additional investment would also be put into 99 by Didi. The deal would also be among the rare instances where investors in Brazilian internet startups would be able to successfully exit. Investors that included SoftBank, Riverwood Capital, Qualcomm Ventures and Monashees were previously invested in 99.
Sources also said that all of the top executives of the company in Brazil, including Peter Fernandez, 99’s chief executive, are anticipated to be retained in the company. While there could be plans for expansion of 99 into other Latin American markets, the company would most likely keep Brazil as its focus market.
“Globalization is a top strategic priority for Didi,” Cheng Wei, Didi’s founder and chief executive, said in a statement.
For ride hailing companies, Brazil is a lucrative market because of the underdeveloped public transportation system there and the population of about 120 million.
Licensed taxi drivers, taxi unions and government regulators were the groups that the 2012 founded Brazilian ride hailing company had been working with. And ever since Uber entered Brazil in 2014, 99 has been its closet competitor. According to data from research firm 7Park Data, the number of people who had the 99 ride hailing app on their smart phone was the highest while Easy Taxi, another ride-hailing company, had the second largest number in second place and Uber was third till the end of 2015.
(Source:www.nytimes.com)
Especially for Uber and Didi which are the two of the largest players in the global ride hailing industry, the deal – to be made in all-cash would fundamentally alter the industry’s competitive dynamics. The fast growing ride hailing markets of South America, including Brazil, are viewed as prize catches for both the companies as they tussle with each other to dominate the markets – wherever possible.
The financial details of the deal were not disclosed by Didi even though it confirmed the deal.
While the companies are at logger heads in Latin America with the purchase of the Uber competitor in Brazil, there are many markets, including China where the two companies are working together.
The deal also indicates that Didi now wants to spread its wings outside of China as well. And this expansion plan has been boosted by a $4 billion funding round in December that was led by the Japanese conglomerate SoftBank.
According to sources with knowledge as quote din the media, around 30 percent of stake in 99 was owned previously by Didi. Sources reportedly said that the Sao Paulo based 99 has been working closely with the technology and engineering team from Didi already in Brazil.
Sources said that Didi now has to pay up around $600 million to purchase the remain shares in 99 and to take complete control of the Brazilian ride hailing company. Some additional investment would also be put into 99 by Didi. The deal would also be among the rare instances where investors in Brazilian internet startups would be able to successfully exit. Investors that included SoftBank, Riverwood Capital, Qualcomm Ventures and Monashees were previously invested in 99.
Sources also said that all of the top executives of the company in Brazil, including Peter Fernandez, 99’s chief executive, are anticipated to be retained in the company. While there could be plans for expansion of 99 into other Latin American markets, the company would most likely keep Brazil as its focus market.
“Globalization is a top strategic priority for Didi,” Cheng Wei, Didi’s founder and chief executive, said in a statement.
For ride hailing companies, Brazil is a lucrative market because of the underdeveloped public transportation system there and the population of about 120 million.
Licensed taxi drivers, taxi unions and government regulators were the groups that the 2012 founded Brazilian ride hailing company had been working with. And ever since Uber entered Brazil in 2014, 99 has been its closet competitor. According to data from research firm 7Park Data, the number of people who had the 99 ride hailing app on their smart phone was the highest while Easy Taxi, another ride-hailing company, had the second largest number in second place and Uber was third till the end of 2015.
(Source:www.nytimes.com)
