Deals | Didi Acquires The Beleaguered Bike-Sharing Startup Bluegogo, Possibly Challenging Its Former Partner Ofo

DiDi is expected to develop a bike-sharing brand of its own.

Photo:Shutterstock.com

Writer: Yang Lin

Didi Chuxing has signed an acquisition agreement with China’s former third-largest bike-sharing startup Bluegogo, and may soon end the acquisition process, KrASIA has learnt from the former top management of Bluegogo and a source close to Didi.

“Didi has frequently approached Bluegogo. As far as I know, they possibly initiated negotiations on the acquisition prior to November, but nailed it down until quite recently,” a source familiar with the matter told KrASIA.

In spite of that, Didi’s PR Department replied with no comment.

Self-owned bike-sharing brand:

KrASIA has also learned from other sources that Didi is now trying to develop a bike-sharing brand of its own, followed by its investment in ofo, the top player in China’s bike-sharing field.

An insider from Didi informed KrASIA as early as December in 2017, that Didi was then incubating a bike-sharing business named “Hai Tang (Begonia)”. Yet it has not been confirmed.

To put it another way, Didi’s intention to enter the bike-sharing market is crystal clear. Acquiring Bluegogo is perhaps a significant step in its overall market strategy.

Ofo-former partner and potential rival:

The two top players namely Ofo and Mobike lead the competition in the bike-sharing industry.

For now, Didi is the largest shareholder of ofo. According to reports by Caijing and other social media, Didi holds about 30% of ofo shares.

It is no secret at all that a split has appeared between Didi and ofo. This November, Didi recalled a couple of its top executives from ofo. An insider from Didi told KrASIA that there was not any sign of that sudden adjustment. He thus concluded that a serious rift would have existed between the two companies since then.

“A rift and even break-up between partners is frequently seen in the commercial world, no exception for Didi and its business partner ofo,” the same insider from Didi claimed. An ofo employee told KrASIA that the competition between Didi and ofo was inevitable in near future.

Relationship with Bluegogo:

If so, it seems to be a rational choice to acquire Bluegogo.

At the moment, the financial details of the acquisition and further information are yet to reveal, but Bluegogo has practically approached Didi since earlier.

A former employee of Bluegogo disclosed that the company failed to seek a buyer in late 2017. After that, a dozen of its employees responsible for product research and development almost at the same time took a job in Grab, who had previously received investment from Didi.

“Grab mainly focused on the market of Southeast Asia. After hearing about so many employees shifted to Grab, I guessed Bluegogo and Didi would certainly have entered into some business relationship in private,” the former employee above added.

The truth is that Bluegogo was continuously looking for a buyer. It has approached a number of companies including bike-sharing companies Youon, Mobike, and ofo, yet all ended in failure.

Read more about how China’s third-largest bike-sharing startup Blugogo collapsed.

On the night of November 16, 2017, 36Kr released an exclusive open letter from Li Gang, founder and CEO of Bluegogo. The letter said that all efforts made by Bluegogo proved futile as it had neither much more capital nor strong financial planning capacity.

“I did poorly in being CEO of Bluegogo and SpeedX (a cycling record software startup founded by Li Gang). I would like to take this opportunity to express my apologies to all concerned including team members, users, investors, suppliers, and partners. I will do my best to recover the loss and sincerely ask all of you to go through this difficulty together with me,” stating Li in the letter.

Li Gang noted in his letter that Bluegogo had reached a strategic cooperation with Green Bike-Transit, an NGO focused on promotion for cycling. Li also stated that Blugogo will solely entrust its future operation to the latter company.

Yet no definite news came out on the Internet if searching for information about Green Bike-Transit. “Cooperation with Green Bike-Transit may be just a transition, as Bluegogo continues to look for a new buyer these days,” a source familiar with the matter said.

Image credit to 123rf.com.cn.

If Didi acquires Bluegogo successfully, what result will bring about on earth?

Is it a move Didi takes to enter the bike-sharing market and declare open competition with its former partner ofo?

Or is it just a show of Didi’s strength to ofo?

At the moment, ofo still takes a seat at the portal of Didi’s ride hailing app. Yet it is hard to say whether it will be later replaced or not.

If Didi indeed develops a bike-sharing brand of its own, what is going to happen between Didi and Mobike?

All the questions are now hard to answer, yet it is certain that competition in the bike-sharing sector will continue. Winner or loser, we should probably wait and see.