January 29, 2015
What is making news from the Cab services market is the planned acquisition of TaxiForSure by Olacabs . Olacabs , which is supported by Japan’s SoftBank, is on the edge of buying its rival TaxiForSure for an estimated $200 million equivalent to almost INR 1,250 crore. This deal sets up ground for a straight fight with Uber to gain dominance over India’s Cab market. The deal is a mix of stock and cash and official announcement of this deal is expected to be made public in the next few weeks. Economic Times reported that “The term sheet has been signed and in the next 10 days the finer details will be chalked out,”
TaxiForSure has struggled for the last 2 months and have been searching for additional funding to keep its momentum going on with other competitors who are supported by wealthy investors. Taxi aggregators around the world are in talks to constitute an alliance against Uber, linking other Cab service providers including Olacabs, Singapore’s GrabTaxi, and San Francisco based Flywheel. In October 2014, SoftBank provided $ 210 million as funding to Olacabs.
Ola has lost a lot of its customers because of poor customer service. Will they be able to handle more?
— Abhirup Bhunia (@abhirup1) January 29, 2015
TaxiForSure raised a staggering $30 million as funding from Accel and Qualcomm but the Olacabs fundraising conveys a message that the momentum is with them.
Estimated at over $10 billion, India’s Taxi market is majorly unorganised. This deal may mark a change in the Indian Taxi market. “This acquisition marks a significant development in the taxi app business in India,” said Sunil Wattal, who teaches management information systems at Temple University in the United States. “This will be problematic for Uber because it does not have any offline presence and no stated plans of being in that space.”
This deal is seen as productive buy as unlike Uber and Olacabs who directly work with drivers, TaxiForSure works with taxi operators. It will definitely give an upper hand to Olacabs as with this deal, Olacabs will get connected to all the taxi operators who are in TaxiForSure’s team.
Will this be enough for Olacabs to compete with Uber? What are your views? Share with us in the comments section below.
Quotes source: Economic Times