Alibaba Is Said to Take Ofo Stake After Founder, Largest Investor Disagree on Merger
(Yicai Global) Jan. 4 -- Alibaba Group Holding Ltd. has reportedly taken a stake in Beijing Bikelock Technology Co. (Ofo) after the founder of the Chinese bike-sharing startup opposed a merger that its biggest investor, Didi Chuxing, had wanted.>
Ofo has closed the USD1 billion deal, an anonymous source close to the company told online media outlet Ifeng. Ofo now plans to roll out car-sharing services, in direct competition with Didi Chuxing, the world's largest ride-hailing firm.
Ofo founder Dai Wei last month dmsed the idea of a merger with main rival Beijing Mobike Technology Co., known as Mobike , after key investors on both sides talked up the possibility, citing h commitment to competition. There no way the two companies will combine because plans did not include a position for Dai, the insider told Ifeng.
Didi, which has a 30-percent stake in Ofo, sent three senior executives to work at Ofo in July as it looked to assume greater control over the Beijing-based company, but it met with restance from Dai.
Ofo under pressure to roll out car-sharing services to compete with Didi's core business and Mobike, which already testing them. It also likely to face stiffer competition in the bike-sharing sector after Didi bought out struggling platform Bluegogo th week.
Ofo and Mobike have been top picks for investors as their ubiquitous bicycles spread through China's cities, putting millions of units back on the streets and clogging up sidewalks for pedestrians. But boom has turned to bust for some in the saturated 'Uber for bikes' market. Bluegogo, the country's number three player, went bankrupt last month.
Alibaba already has its fingers in the bike-sharing sector. It led the merger between Hellobike, run by Shanghai Junzheng Network Technology Co., and Changzhou Youon Public Bicycle System Co., and took part in a USD350 million funding round at the new company.
Top contenders in China's bike-sharing sector are likely to include Mobike , which has support from internet titan Tencent Holdings Ltd.; Alibaba-backed Hellobike , Changzhou Youon and Ofo; and Didi-led Bluegogo, the insider said. Competition between the three investors will continue to spread across the transport industry, he added.