A deal between Chinese bike-sharing startup Ofo and its potential buyer ride-hailing giant Didi Chuxing was stuck in a stalemate as the latter was only offering $1.5 billion and continued to lower the price, according to a report by online technology media platform 36Kr.
Multiple sources said the two companies discussed the bid many times in July and a person close to the issue said Didi had sent due diligence investigators to Ofo in the past two or three weeks, the report said.
“Didi continued to undercut its offer and the price went down after every talk. There is also a claim that Didi’s current bid has been calculated in Renminbi,” the person told 36Kr.
In addition, the person said the offer from Ant Financial, Ofo’s another potential buyer previously, was even lower than the one from Didi.
The price tag of Ofo will inevitably be compared with the valuation of its largest rival Mobike. In April, Mobike was acquired by China’s largest provider of on-demand online services Meituan-Dianping at a price of $2.7 billion, which was over $1 billion more than what Didi offered to Ofo.
While a price of $1.5 billion is far lower than Ofo CEO Dai Wei’s expectation, the report said Ofo might not be able to escape the fate of being bought by Didi as it has been due to shortage of fund.
A communication service provider for Ofo said recently the bike-sharing platform has not paid the intelligent lock communication services fee for more than half a year and if that continues, the company will stop its service, which will influence about 3 million bicycles, according to the report.
In June, Shanghai transportation regulator released draft rules on shared bicycles for public comment, adding that commercial ads put on shared bicycles will be banned. If the regulation is approved, Ofo’s cash income from ads will be directly reduced.
Ofo also faced bad news from its overseas market. Earlier in July, the company said it will stop operating in Israel at the end of July, just five months after it entered the country, according to Xinhua.
Its overseas presence has been shrinking as it reduced staff and closed business in several US cities, and exited from Australia, Germany and Spain markets, according to a previous report by China Daily.
36Kr said Ofo is trying to win more bargaining chips by increasing its cash flow through developing blockchain business and loan supermarket business.
In May, Ofo announced plans to establish a blockchain research institute.
In addition, the company launched a subsidies promotion for customers by selling an annual member card priced at 199 yuan for 99 yuan and returning 50 yuan to users who successfully invite a new customer to the platform.
An industry insider said Ofo wants to acquire new users and cash flow through this promotion to support its daily expenses, according to 36Kr.
While Didi refused to comment on the issue, Yu Xin, co-founder of Ofo, told 36Kr on instant-messaging app WeChat that it was “nonexistent”.