Apr. 8 (NBD) -- Meituan Dianping, one of China's top on-demand online service providers, reached the deal on Wednesday to acquire the leading bike-sharing start-up Mobike.
Two sources told Reuters that the equity value of the deal was 2.7 billion U.S. dollars and Meituan Dianping will assume around 700 million U.S. dollars in debt.
According to Bloomberg, a person familiar with the matter said that 65 percent of the purchase will be in cash, mostly used for Mobike management, while 35 percent will be in stock.
Wang Xiaofeng will continue to serve as CEO of Mobike and Hu weiwei as president. Wang Xing, Meituan Dianping's CEO, will become the chairman of the bike-sharing enterprise.
Mobike emphasized its brand and operation will remain independent. However, Wang said in Mobike's shareholder meeting on Tuesday that though the company insisted on developing independently, China's start-ups can't avoid being controlled by some giants.
During development of the bike-sharing industry in the past 3 years, the enterprises find it hard to make profits with current business model due to high rate of damage and loss, fluctuation of using frequency and limited using scenarios, Zhao Xiangxiang, analyst of Automobile and Mobility Research Center of the data provider Analysys, told NBD.
Mobike's unclear path of profitability and great pressure of costs and debt caused by large input at initial stage of its development bring difficulties to the company to operate independently, according to Zhao.
The deal is believed to intensify the rivalry of Meituan Dianping's backer Tencent Holdings with e-commerce giant Alibaba Group.
Alibaba announced on Monday its takeover of the online food delivery platform Ele.m, so as to take on Meituan in the food delivery field.
Besides, in December of 2017, Alibaba-backed companies made the investment in Hellobike, becoming the largest shareholder of the company. Later in March this year, Mobike's major competitor Ofo completed a new financing of 866 million U.S. dollars led by the Group.
The year 2017 has seen a number of subsidy wars among sharing-bike companies which attempted to scramble for users and cultivate the consuming habit.
This year, the discounts such as monthly card and free ride have been cancelled.
As the monthly card price has been back to the common level, with stable user habits as well as the bike scale, the deal will not lead to a new round of subsidy war, Zhao commented.
Users have accepted the prices of bike-sharing service, thus there's no need to provide many subsidies, added Zhao.