In June, Uber announced that it had received a US$3.5 billion investment in Saudi Arabia’s sovereign wealth fund. Subsequently, Diqing Liu, president of the trip to the line to attend the Code Conference, said that the trip to the trip financing has not yet ended, the total amount has exceeded Uber announced the amount of 3.5 billion US dollars. Uber and Didi's financing battles have intensified. In fact, the giants of the two taxi markets never competed.
However, recently, Uber and Didi seem to have signs of handshake and talk.
According to Bloomberg, Uber's investors have already conveyed a message to the company's management: It is time to end the "burning money" war in China.
Sources said that several institutional investors are currently promoting Uber and the Chinese taxi market leader Didi to sign a cooperation agreement. Uber has invested billions of dollars in expanding its market share in China. Investors intend to prevent Uber from implementing this plan. Sources also said that although Uber and Didi’s executives need to engage in “trends†negotiations, investors from both companies are already discussing a potential deal.
An Uber investor stated that he had conducted more than 10 meetings and negotiations and telephone consultations with Didi shareholders interested in peace talks. However, he declined to disclose the specific identity of shareholders.
Uber and Didi have not hesitated to burn money to compete for China, the world's most populous market dominance. Uber has said that the company will invest at least US$1 billion each year to expand its business in China. In order to compete for market share, both companies provide drivers and passengers with subsidies and free travel opportunities.
Informed sources disclosed that as Uber's investor and director, venture capital firm Benchmark partner Bill Gurley had a brief communication with Dickey's president Liu Qing at the Code Conference conference a few months ago. Unlike Didi CEO Cheng Wei, Liu Qing, who is fluent in English, has already travelled to the United States to promote the company and met with supporters such as Apple. According to sources, Liu Qing also met with Umil Senior Vice President Emil Michael this year. The source refused to disclose whether the topics covered in the meeting included the specific content of the agreement or cooperation. Another insider familiar with the incident stated that the two companies have not yet discussed the transaction.
Negotiating chips
Because both companies have the will to insist on independent development, both Uber and Didi are worried that they will be open to the deal or will weaken the bargaining chips. Didi is currently occupying a leading position in China's domestic market - with 14 million drivers and operating in 400 cities nationwide. Uber plans to expand its business in China to 100 cities this year.
Uber has established a separate branch for the Chinese business and has attracted local Chinese investors. However, as the parent company, Uber still invests in it and the two companies are inextricably linked financially.
Among unlisted technology companies, Uber and Didi are a pair of heavyweight competitors. Uber’s latest valuation has reached nearly $68 billion, and said it currently holds more than $11 billion in cash and convertible bonds. Didi's recent valuation is worth US$28 billion, and it said that its cash and convertible debts have reached US$10 billion.
At least in a certain sense, this way of raising cash means both parties are interested in continuing to “burn money games†in the Chinese market. There are also many investors who think that Uber and Didi are playing a "ghost game." In fact, they are all continuing to burn money, waiting for their competitors to bow down and continue to return to the negotiating table.
In this way, it seems that businesses outside of China seem to do better business. Uber said it has achieved profitability in the U.S. and Canadian markets. However, the company’s profits in developed countries were offset by losses in developing countries.
How to divide the cake
Sources said that one of the potential obstacles to reaching a cooperation agreement is to split the ratio. Detroit wants more shares than Uber is willing to give. Investors have already suggested that Uber's subsidiary in China be taken by drop, while Uber becomes a minority shareholder of Didi. A Uber spokesperson declined to comment on this, and Didi and his public relations firm, Brunswick, also failed to respond to multiple e-mail requests for comment.
In fact, the mode of cooperation with peers is no stranger. The company has actually formed an international alliance with Lyft in the United States, Ola in India, and Grab in Southeast Asia.
Lyft is Uber's main competitor in the United States. Didi has invested $100 million in Lyft, which further complicates the potential peace talks between the two companies. The source said last month that Lyft has hired a Qatalyst Partners investment bank to seek potential equity purchasers.
Investor pressure
The recent series of mergers and acquisitions in China’s Internet industry have made it possible for the outside world to see investors’ willingness, even though these merger deals were initially opposed by the founders of the company.
Due to pressure from shareholders such as Alibaba and Tencent, Didi and its competitors quickly achieved a merger last year, which formed China's largest taxi service provider. Last year, under the auspices of the capital, Ctrip and Qunar.com have also married the online travel industry.
Uber’s cumulative financing currently exceeds US$15 billion and attracts many investors including venture capital, hedge funds and sovereign wealth funds. However, because the company’s CEO Travis Kalanick stated that Uber wants to postpone the time-to-market as much as possible, investors’ funds can only be locked indefinitely.
Informed sources said that in addition to regulatory issues, the loss in the Chinese market is also a major obstacle to Uber's listing. According to the current valuation, Uber is not only one of the world's largest private technology companies, but also higher than 85% of the S&P 500 companies.