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, are considering a merger, Wall Street Journal reported yesterday.
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.
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.
The two companies’ US-based competitor Uber raised $1.2bn in December 2014 with the aim of expanding into the Asia Pacific region. In China, Uber has a strategic agreement with search engine Baidu.
Although merger talks are in advanced stages, both companies still need the approval of shareholders. If the merger goes ahead, the new company would be worth $6bn and dominate 95% of the Chinese market, making it much more difficult for Uber to enter.