Hello TransTech to Acquire ofo?
Bike rental and ride hailing startup Hello TransTech, previously known as Hello Bike, is reportedly in negotiation to acquire ofo, a person close to the matter said to leading local finance outlet Blue Whale TMT (in Chinese) this morning.
The person said the on-going acquisition negotiation is now focusing on price and share exchange rate. A suggested plan is to set the rate between the range 1:5 to 1:2.5, meaning that one share of ofo will be sold to Hello TransTech at a price equivalent to that of 0.2 to 0.4 shares.
According to Blue Whale TMT, some data the two parties are still calculating for the final decision include due diligence analysis of Hello TransTech and ofo’s operational data. Revenues, online bike orders, and daily bike use frequencies of the two companies are under comparison for acquisition price confirmation and planning.
The person also said that according to an internal document, ofo will find it difficult to provide a “valuation under an assumption of continuous operations”, suggesting that the company can no longer prove its value regarding the accumulated $1.4 billion funding it has received in total so far.
In the meantime, on October 18, Hello TransTech was reportedly (in Chinese) seeking new financing from Ant Financial by proposing equity pledge for an undisclosed amount. Ant Financial led ofo’s E2-2 round of financing worth hundreds of millions US dollars completed in September.
TechNode reached out to Hello TransTech to confirm the deal, and to see whether the new financing plan is largely due to the acquisition deal. “The board of directors of ofo invited Hello group to cooperate with them, but at this stage, we reckon the priority should be improving our own capability and better serving our users,” Hello TransTech told TechNode, giving out no further information. In a response (in Chinese) Hello TransTech gave to local media, the company denied the deal directly.
If the deal is true, Hello TransTech will take over ofo’s business in major cities, an area Hello Bike found reluctant to enter due to fierce competition and sophisticated policy environments.
It was widely suspected that Didi Chuxing was in talks with ofo for. Both Didi Chuxing and ofo denied firmly, and ofo said that independent operation status is crucial to the company. Hello TransTech’s entering the deal may suggest a failure or hardship of ofo’s attempt to raise money from other sources.
Nevertheless, Hello TransTech’s financing request implies a general cash-burning situation in the bike rental industry, and players in the filed are cultivating new sectors and partnerships to hedge any further loss risks. The company launched its taxi-hailing business earlier this month, soon after it rebranded from a bike startup to a transportation tech enterprise and after it announced a partnership with Alibaba’s Ele.me for food delivery membership in August.
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Images: TechNode
