In order to avoid a costly war that could drag one or both companies out of business, China’s two leading bike-sharing services might just merge, if they listen to the will of some of their investors.
Mobike and Ofo investors are currently in the process of holding early talks aimed at creating a single shared bike app to rule them all, according to a Bloomberg report which cites sources familiar with the matter.
Neither company has said that they are interested in a merger. Only this June, Mobike founder Hu Weiwei said that, despite mounting competition, there was no possibility of her company merging with its arch-rival, explaining that bike-sharing features “asset-heavy business models.”
Indeed, a Mobike-Ofo merger would be difficult to pull off, Bloomberg reports that investors are currently holding talks to sort through tough issues like how to split equity. Mobike is valued at $3 billion while Ofo is valued at $1 billion. Both companies have millions of bicycles and are trying to roll out their services around the world. They have each received hundreds of millions of dollars in investment and are backed by Chinese tech giants — Ofo by Alibaba and Mobike by Tencent.
But the reason that some believe a merger is a possibility is that we’ve seen this play out before. In 2015, China’s two leading ride-hailing apps — Didi Dache, backed by Tencent, and Kuaidi Dache, backed by Alibaba — merged into Didi Chuxing which then went on to consume its last remaining competitor, Uber China. That same year Meituan (Alibaba-backed) and Dianping (Tencent-backed) also merged into one group-buying behemoth.
A merger, while complicated, would likely be beneficial to both parties, allowing them to raise prices and cut back on the number of bikes flooding China’s sidewalks and streets. Last month, photos went viral on Chinese social media showing a vacant lot in Shanghai populated by shared bikes confiscated by police with yellow Ofo bicycles on one side facing off against orange Mobikes on the other.
Meanwhile, if the two companies do one day decide to merge, TechNode already has a spectacular name picked out — Mofo.
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