Looks like warring taxi aggregators Uber and Ola may shake hands and close a deal soon. A source, who did not want to be named, told dna that Uber is close to acquiring a controlling stake in rival Ola.
He claimed that except for Japanese investor SoftBank, the rest of the shareholders in the Bengaluru-based start-up, including promoters Bhavish Aggarwal and Ankit Bhati, would exit from it.
The source said that Aggarwal's stake of around 17% has been valued at $680 million and the enterprise value (EV) of the cab-hailing company has been estimated at $4billion.
According to him, the stake of the biggest stakeholder, SoftBank, in Ola would be around 26% after the deal.
"Uber is buying a controlling stake in Ola, where all the shareholders, except SoftBank, is being bought out. The enterprise valuation is being estimated at $4billion," said the source.
He did not provide more details. The deal is being worked out between the cab-summoning rivals, but said that due diligence would be completed soon and a term sheet could be signed in the current quarter itself.
Ola executives and spokespersons neither denied nor confirmed the deal. An email sent by dna went unanswered till the time of going to press. When contacted, Anand Subramanian, senior director (marketing and communication), Ola, told dna he would get back after consulting his company officials but did not respond to calls made to him later.
Bhavesh Agarwal of Ola - Reuters
If the deal goes through, it will give Uber an undisputed dominance in the domestic market. Currently, Ola is the market leader with a reportedly 40-45% share against Uber's reportedly 25-30% share.
Uber CEO Travis Kalanick, during his recent Indian visit, had claimed that the company's market share was close to 40%. Similarly, last year, SoftBank, in its regulatory filing with the Tokyo Stock Exchange, had reportedly claimed that Ola had 85% market share as of June 30, 2015.
In terms of number of drivers too, Ola has an edge over its competitor with about 3.5 lakh drivers compared to Uber's 2.5 lakh. Ola Cabs was started by Aggarwal and Bhati in 2010 while Uber's services were launched in 2013.
The two have been engaged in a bitter battle for market share. In order to expand inorganically, Ola had recently acquired its smaller rival TaxforSure for $200 million last year.
Besides SoftBank, the other investors in Ola include Tiger Global and Sequoia Capital. Late last year, it had raised $500 million from Baillie Gifford, Tiger Global, SoftBank Group and others to intensify its fight against Uber and Meru, another reasonably significant player in the market.
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