[Exclusive] Mobike, Ofo Work Separately to Secure Financing as Merger Rumors Stir
Jiang Xuan|Zhao Chenting
/SOURCE : Yicai
[Exclusive] Mobike, Ofo Work Separately to Secure Financing as Merger Rumors Stir

(Yicai Global) Oct. 30 -- Beijing Bikelock Technology Co. (Ofo) and Beijing Mobike Technology Co. are working separately to secure financing despite rumors that the two bike-sharing firms plan to merge and end their costly competitive battle.

The two firms are not contacting each other about a merger on the company level, and they will likely announce their next rounds of financing soon, sources told Yicai Global.

The combined valuation of Ofo and Mobike will likely exceed USD4 billion, international media reported. "Mobike is the clear leader in technology, product and operational efficiency," Mobike said in response to the gossip. "We are not contemplating a merger."

Ofo founder Dai Wei said in several internal meetings that the market can handle two major players, and progress comes from competition, a person close to Dai told Yicai Global. Ofo is eyeing market dominance, but is not pursuing a merger, the source said.

Once these two companies dominate the market in many cities, the government has stepped in to control situation and they are only able to compete on price, they should consider merging, said GSR Ventures Managing Director Ding Jian. This isn't the case yet -- they still have room to advance and their business models are a little different, Ding said.

The two firms are not talking about a merger, an early Mobike investor said. Mobike is focused on expanding outside of first-tier cities, the investor said.

Ofo is about to finish a round of financing led by SoftBank Group Corp. [TYO:9984] and the firm will use the funds to develop overseas markets and the Internet of Things, an insider said.

Mobike will likely look for additional funding as it recently laid out to put more bikes on the market and collaborate with ride-hailing operator Shouqi Limousine & Chauffer and ride-sharing app Dida Pinche.

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Keywords: OFO , Mobike , M&A