Uber investors push for truce with Didi Chuxing
UBER Technologies Inc investors have a message for management: It’s time to wrap up the costly fight in China.
Several institutional investors were pushing the ride-hailing company to ink a partnership agreement with China’s market leader Didi Chuxing, according to people familiar with the matter, stemming the billions of dollars Uber is spending to expand in the region.
Investors in Uber and Didi had discussed a potential deal, though the companies’ own executives would need to negotiate any truce, said the people.
One Uber investor said he’s had more than 10 meetings and calls with Didi shareholders that want the companies to cut a deal.
Uber and Didi are bleeding cash in China as they fight for dominance in the world’s most populous country. Both are giving out incentives for drivers and free rides to compete for market share.
Benchmark’s Bill Gurley, an Uber investor and board member, spoke with Didi president Jean Liu at the Code Conference in California a few
FIERCE RIVALRY: Firms bleeding cash in costly fight for market dominance in China
months ago, said a source.
Liu, who speaks fluent English unlike Didi chief executive officer Cheng Wei, has made several trips to the United States, where she evangelises for the company and meets with backers, including Apple Inc.
She also met this year with Emil Michael, Uber’s senior vice-president of business, said another source.
The two companies were not currently discussing a deal, said a person familiar with the matter.
With both companies asserting their intent to grow independently, executives at Uber and Didi were concerned that appearing open to a deal could undercut their negotiating leverage with each other, said the people.
Didi is in the lead on its home turf, with 14 million drivers signed up in 400 cities. Uber has set a target of operating in 100 cities this year.
Uber, which was last valued at nearly US$68 billion, says it has access to more than US$11 billion in cash and equity.
Didi, which was last valued at US$28 billion, says it has more than US$10 billion at its disposal in cash and equity. application is displayed on a smartphone screen. The
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Many investors believe Uber and Didi are playing a game of chicken— burning cash and waiting for their competitor to concede defeat or come to the table.
One potential roadblock to a partnership agreement was how fees would be split, according to one of the people.
Didi would want more of the combined revenue share than Uber would be willing to give up, said the person.
Investors had also proposed that Uber China be absorbed by Didi, with Uber becoming a minority shareholder in the Chinese company, said another person. Bloomberg