The Acquisition Of TaxiForSure By Ola Cabs Is A Step Closer To A Two-Horse Race Scenario

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It was destined and finally it concluded after a long two and a half months of negotiations and speculations; India’s largest taxi aggregator Ola Cabs has officially confirmed the acquisition of its archrival TaxiForSure in a cash and stock deal worth $200 million. The deal will consolidate the booming mobile app taxi bookings business in India and is being considered as a step that will mount pressure on Uber to acquire Meru as soon as possible.

According to the acquisition terms, both Ola Cabs and TaxiForSure will function as an independent entity – something similar to Flipkart-Myntra structure. While all 1,700 employees of TaxiForSure would be retained and would service to its customers as it is, the co-founders of TaxiForSure, Apr Amy Radhakrishna & Raghunandan G – will make way for the new CEO Arvind Singhal, who has been serving the company as COO for long now. Both the co-founders of TaxiForSure will move to an advisory role and help the transition process.

“Ola and TaxiForSure share the same vision of revolutionizing urban mobility,” Ola CEO Bhavish Aggarwal said. “TaxiForSure has a great team and they have built a very exciting business in a short time. There’s a lot of complementary value in the strategy TaxiForSure has followed.”

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The acquisition of TaxiForSure helps Ola Cabs strengthen its presence in the market, especially after the aggressive pricing strategy adopted by its closest rival now, Uber. Quite recently, Uber has slashed its price to further low to acquire a lion’s share of the market. Founded in 2009, Uber has rapidly expanded its operations in 55 countries and sitting at a mammoth valuation of $42 billion. Initially, it was Uber who showed its interest in acquiring TaxiForSure but the talks fell apart as TaxiForSure investors reportedly found Ola Cabs a better choice to go with in India. The failed attempt forced Uber to look towards Meru, another Radio Taxi service provider. According to few person known to the matter have claimed that the talk is in the final stage and could be concluded anytime within this month.

The exploded growth of smartphone and mobile internet industry has helped mobile and internet based startups to take flight to success. Global Investors like Softbank, Tiger Global are betting big time on the market while small & local investors are succeeding to make an exit with handsome returns at jaw-dropping valuation of Indian startups. Backed by Japanese Soft Bank, Ola Cabs is reportedly in talks to raise another $500 million at a valuation of $2 billion and a month back Uber had raised $1.6 billion to boost its global presence.

Considering Meru get acquired by Uber anytime soon, the taxi-service business in India is coming to age now and eventually may turn up becoming a two-horse race. However, the growth is coming at the cost of investors and the real competition would begin at the time when Ola and Uber both withdraw discount-based model from the market. Who records profit in books then, is a matter of discussion and consideration now.

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