China-based ride-sharing companies Kuaidi Dache, backed by telecom company Softbank and e-commerce company Alibaba, and Didi Dache, backed by internet company Tencent, will merge, according to TechCrunch.
The newly merged company will be worth approximately $6bn and cover 95% of the Chinese market – representing about 150 million users.
The merger enables the two companies to stop a price war that had been cutting into their margins, and be in a stronger position against their US-based rival Uber. Uber has a strategic backer in China-based internet company Baidu and secured $1.2bn in December 2014 specifically with the aim of funding an expansion into the Asia Pacific region.
Kuaidi Dache and Didi Dache also receive a competitive edge by avoiding the recently enacted restrictions in Shanghai and Beijing that stop drivers from using multiple apps.
Kuaidi Dache secured $600m in a January 2015 round led by Softbank subsidiary Softbank Internet and Media and featuring Alibaba as well as investment firm Tiger Global. The company previously received $100m in 2014 from Alibaba, Matrix Partners and New Horizons. Car rental company eHi has invested $25m.
Didi Dache meanwhile closed a $700m series D round in December 2014. The round included Tencent and was co-led by Singapore’s sovereign wealth fund Temasek and investment firm DST Global. Tencent also backed a $100m series C round in January 2014 and $15m series B round in May 2013. Didi Dache has secured a total of $820m in funding.