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Is an Ola-Uber merger on the cards? Common shareholder SoftBank facilitating talks, says report

BusinessToday.In     March 29, 2018

Japanese investment giant, SoftBank is reportedly pushing for a merger between US cab-hailing giant Uber and homegrown Ola. SoftBank that is facilitating the talks is the common and also the largest investor in both the companies. With this move, the investment giant is also looking to consolidate its position in the country. The talks, according to reports, have been going on for a year and are likely to be confirmed in a couple of months.

Uber that recently exited the Southeast Asian market after selling its unit to rival Grab, would be holding 27.5% stake in the merged entity. If this deal follows through then it will become the US giant's fourth retreat in the global market. Before selling its Southeast Asian unit to Grab, Uber had sold its Chinese unit to rival Didi and its Russian unit to Yandex.

According to a report by Business Standard, SoftBank is in favour of Ola acquiring Uber's India unit. Nevertheless, the details are still being discussed. While SoftBank declined to comment, Uber denied any such talks. An Ola spokesperson declined to comment on this matter but said they are always looking to expand their footprint.

However, Dara Khosrowshahi, CEO of Uber had said that the Grab deal was great news for the company as it would let them focus on its core markets, including India. "The great news about our Grab deal is that it allows us to double down to invest aggressively in our core markets - and we consider India very much as core to Uber's success. We'd, of course, look at any deals that can add value to our partners and shareholders, but we believe in controlling our own destiny in India," he said in a mail sent to Uber employees that was later published in their blog.

In India, both the companies have been on a stiff competition. Both Uber and Ola frequently roll out offers and coupons to lure more riders. Majority of the incentives provided by the companies to the drivers have also been rescinded, leading the drivers to go on a massive protest recently. However, both the companies are burning significant amounts of money every month. While Ola's burn rate is said to be marginally better than Uber's, it is not much to go by.


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