Chinese ride-hailing giant Didi Chuxing is reportedly closing an acquisition deal of ofo, the last remaining major independent player in China’s bike-rental industry, local media reported citing people familiar with the matter. The source disclosed that Didi already sent due diligence team to ofo over the past two to three weeks.
The two parties are still bargaining on ofo’s valuation, the report added. Local media once reported Didi’s offer for ofo is only around $1.5 billion, that’s around half of Mobike’s valuation and far lower than the company’s expectations. As ofo’s cash strain becomes worse, Didi is gradually lowering the price, said the source to local media, adding that price offered by Alibaba is even lower.
Ofo denied the rumor in an official statement, adding, “As a top and the only major independent bike-rental company, ofo pioneered the growth of the bike-rental industry. We will continue to serve the users and contribute our efforts to solve traffic congestion and air pollution problems in cities.”
Rumors about a possible takeover of ofo have been around for a while since Meituan acquired ofo’s largest rival Mobike, or even before that. But ofo’s founding team led by co-founder and CEO Dai Wei has been fighting tenaciously for the company’s independent status.
After rebuffing an offer from Didi this May, Dai Wei once likened ofo’s status to the film “Darkest Hour” at an internal meeting and called for the employees to fight till the end of the war.
But now, ofo’s “Darkest Hour” seems getting even gloomier. The troubled company has been under a series of negative attention over the past two months.
Its attempts to monetize through selling ads on bikes and apps hit roadblocks as several regional municipalities, such as Shanghai, put bans on placing commercial ads on bikes. The company is drawing back from several overseas markets, such as Australia, the US, Spain, Germany, India.
Competition from rivals is fiercer than ever. Old rival Mobike removed deposits for all users in China in an effort to standardize its deposit system. Alibaba-backed Hellobike is quickly catching up with focus on lower-tier cities.