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January 4, 2018

didi to acquire 99, declares war on uber

The war between Didi and Uber is set to escalate and intensify with the Chinese ride hailing app set to acquire acquire 99, one of Latin America’s major ride-hailing companies.This acquisition is set to increase Didi's dominance across Uber's strongholds and beyond Didi's traditional market, -mainland china despite both of them being funded by the same tech giant SoftBank.Late last month SoftBank had bought a sizable stake in Uber at a significant discount, after investors and employees put shares equal to about 20% of the company up for sale,according to the the Wall Street Journal.Founded in 2013, the South American the app based taxi hailing ride 99 has been Uber’s fiercest competitor in Brazil, the most populous country in Latin America.Sao Paulo and Rio de Janeiro are Uber’s two busiest cities in the world as ranked by the number of trips that take place there according to Bloomberg. 

Like Didi, 99  originated as an app for hailing existing municipal taxis, before venturing out into private ride-hailing. In January 2017, the company scored a $100 million investment from Didi, and in March secured an additional $100 million from Japan’s SoftBank the first time.Now it seems that Didi is buying the Brazilian ridesharing startup, in a deal that values 99 at $1 billion.In case this is true, it would seem like a full blown war between Uber and Didi inspite of being funded by the same parent company Softbank.Didi currently is said to have over  more than 450-million users on its platform and handles more than 25million rides per day. Post acquisition of 99, Didi will have access to  14-million registered users in Brazil as it pushes into the growing Latin American car-share market.

However it would be too early to say if this will be an all-out acquisition or a matter of Didi taking a controlling (but not fully acquired) share. An all-out acquisition would be an aggressive, turn for Didi, which has traditionally mostly focused on investing in comparable regional startups rather than buying them outright. Other ridesharing companies that Didi has invested in include Grab in Southeast Asia, and Careem in the Middle East.Didi has not disclosed the terms of the 99 acquisition, but the New York Times reported the deal  to be worth around $600 million. 

If this is true it marks the clearest sign yet that Didi will not stay confined to China and will actively aid and directly compete with Uber’s rivals across the globe.According to quartz which reported the deal weeks ago before it was finalised, some Didi employees had relocated to Brazil to help 99 launch in new cities. 

The regional growth strategy of the Chinese ride hailing app also appears to align with Didi’s own global interests. Just last month, the company was reported to be planning an entry into Mexico alongside expansions in its Asian home market, most recently expanding into Taiwan through a franchising model. The acquisition  is a reminder to the fact that Uber and Didi have not yet reached a proper truce and seems to be fighting for increasing dominance. In August 2016, the two companies ended their rivalry in mainland China when Didi acquired Uber’s operations while investing $1 billion in Uber’s global business. In exchange, Uber took a roughly 17% stake in Didi.Meanwhile Didi currently has international tie ups and partnerships with over seven "major international players", serving more than 1,000 cities worldwide, including Southeast Asia’s Grab, India’s Ola, US-based Lyft and Europe’s Taxify.