Mobike, Ofo investors are in talks to merge China startups

Bloomberg

Mobike and Ofo investors are in early talks to push China’s two largest bike-sharing startups into a merger, aimed at ending a costly competitive battle and creating a single dominant player in the fast-growing business, according to people familiar with the matter. Investors in both companies have been holding talks to sort through issues such as how to split equity as a precursor to getting the companies to the table for negotiations, said the people, asking not to be identified because the matter is private. The pair’s combined valuation would likely exceed $4 billion.
The companies are separately backed by China’s two biggest internet giants—Alibaba Group Holding Ltd. and Tencent Holdings Ltd.—which have a track record of investing in competing startups and then combining them as a leader emerges to save money. Unlike in ride-hailing for cars however, China’s bike-sharing startups are the global pioneers and are plotting expansions abroad. A truce at home would give them more resources to gain ground in the US, Europe and other parts of Asia.
Shi Shaochen, a spokesman for Ofo, registered as Beijing Bikelock Technology Co., declined to comment. Mobike said in a statement that it is not contemplating a merger.
“Mobike is the clear leader in the global bikesharing industry, supporting 30 million rides in 180 cities around the world every single day,” the company said. “We are fully focused on extending our global success.”
The bike-sharing boom has boosted demand for bicycles from companies such as Shanghai Phoenix Enterpris, Zhonglu Co and Giant Manufacturing Co.