Ant Financial, an affiliate company of Alibaba Group, & Chinese ride-hailing giant Didi Chuxing are reportedly in the process of jointly acquiring troubled bike-sharing startup Ofo for $1.4b and bearing its $200m debt, according to an account by All Weather TMT, which quoted people familiar with the matter.
The sources indicated that a framework agreement has already been inked by the technology majors, though both Didi & Ofo have denied this development. The reported acquisition comes amid increasing competition in the bike-sharing space and a global scaling back of Ofo’s operations, with Chinese media reporting that Ofo’s internal cash flow woes have resulted in a massive layoff.
At the end of July, it was already reported that Didi was considering a buyout of Ofo, while its competitor Mobike was bought over by Chinese O2O platform Meituan Dianping for $2.7b in April.
In July, Didi and Ofo reopened discussions around an acquisition which had broken down in early April due to Dai Wei, Ofo’s co-founder and chief executive, insisting on maintaining the company as an independent entity, according to an account by the SCMP.
Despite these reports, according to details in an interview with Christopher Hilton, Ofo’s head of communications and public policy for Southeast Asia, Ofo’s official goal now is to focus on its most promising markets, with the aim of being profitable by end-2018.
Since July, Ofo has withdrawn from the global bike-sharing space to focus on core markets in the Asia Pacific, exiting North America, Israel, Germany, Australia, and India.
The cash flow issues impacting the company are an industry-wide phenomenon, with Chinese bike sharing services facing growth and cash-flow related issues since 2017. Bluegogo, which went bankrupt late last year, and was acquired by Didi earlier this year.
Editor: Shiwen Yap