Why is it impossible to merge Drip and Uber? There are four reasons for this

Now Didi is bent on exploring a viable international road. In fact, while Uber and Didi seized the Chinese market, Didi also invested Uber’s largest competitor Lyft in U.S., Ulabob, Uber’s biggest competitor in the Indian market, and Grab, Uber’s biggest competitor in Southeast Asia. Obviously, Didi hopes to compete with Uber in the global travel market and eventually get a higher valuation than Uber.

For Uber, the combination of Uber and Dick is also an unwise choice. Uber’s incredible high valuations are largely recommended as “the only coverage of the global market”. Once Ubuntu is sold to Chinese competitor Didi, this will mean that Uber's global expansion measures will not be effective in the world's largest travel market.

Yesterday, on the other side of the ocean, Bloomberg’s rumors of “combination of the two dribbles” blew up the circle of friends. This allegedly rumored grapevine caused an uproar in the industry.

However, as soon as the rumor came out, both parties quickly denied it. Didi said: "We have no similar plans and do not comment too much on the market message." And China senior senior vice president Liu Wei said in the WeChat circle of friends, the merger "is purely rumor, and growth is very fast, we Very busy, no reply."

As for the reasons why DDT would merge with Uber, it seems that there are no more than three in the industry card:

For one, the two companies have many co-investors and there is a basis for consolidation.

Second, the subsidy war that lasted for a long time caused tremendous pressure on the funds of the two companies.

Third, the combination of Didi and Uber will completely monopolize the Chinese travel market and increase the imagination of both parties.

The above reasons seem to be very logical, and considering that the market's first and second mergers in recent years have been nothing new, many people have chosen to believe this rumor. However, if we go deeper, we will find that the merger of Drip and Uber is more or less reliable.

First, not afraid of competition, both companies are currently short of money

As in the earlier merged companies, Uber is still not short of funds. In the past three months, the two sides took several billion US dollars through equity financing, debt, and high-interest loans.

Uber’s current financing has reached US$15 billion. The investors include a group of venture capital institutions, hedge funds and sovereign wealth funds, Saudi Arabia’s public investment funds, Guangzhou Automobile Group, China Life Insurance, Baidu, Vanke, and others. On July 8, Uber leveraged high-yield leverage to raise $1.15 billion.

DDT, after obtaining a US$1 billion investment from Apple in May this year, has raised more than US$5 billion in total financing. Behind this is a number of domestic capital forces such as Ali, Tencent and venture capital firm DST. In June this year, China Life Insurance Company spent nearly 600 million U.S. dollars to invest in Didi Chuxing.

According to the report from the CEO Zhou Hang, the entire car market last year burned 20 billion yuan. However, this year's subsidy market has begun to calm down, and the special car market has entered the competition efficiency stage. Didi, Uber's cash reserves are sufficient for another year, and the basis for the merger of diluted shares does not exist.

Of course, there is indeed the possibility that investors do not want to subsidize the station. In particular, the joint investors of both parties are certainly not willing to enjoy the Uber step and the two sides continue to tear your life and death, because you can't see the end of the burning subsidies, in fact, It is burning their money. However, due to the decentralization of DDT and Uber shareholders, the management has a greater power of discourse, and there is a great deal of uncertainty about whether the two parties will compromise the capital market.

Second, Uber is a drop subset, the significance of the merger is not

In the strict sense of both parties, the current merger cost is very high. At present, the two companies have a valuation of several hundred billion US dollars. They are taking debt financing. Uber's loan also shows that its stock price is high enough that few people can catch the rhythm. For the two companies that are still at a loss, it takes a lot of courage to eat each other. If it really merges, it is bound to exchange shares. Investors earlier proposed that "Ubersteps will be integrated into Didi, and Uber will become a small minority shareholder."

The key question now is that DDT is not willing to accept Uber . We know that Uber has focused on the field of taxis, has achieved absolute leadership in the global market, and has extended a number of lifestyle services based on travel, such as UberEATS. At present, although DDT is mainly in the Chinese market, DDT wants to do it based on the whole industry chain of life travel. Although there is a certain difference between the two, but the same goal, all are about the travel market to extend more imagination space.

Uber China Strategy Director Liu Hao said this month that "Uber plans to surpass China in the end of next year. We believe this goal cannot be achieved. Dripping into the hearts of users; it has a solid market share, thanks to Didi cooperates with the local taxi service, while Uber only offers a special car service. Didi also provides other transportation options. For example, the owner can use the drunk to drive.

One thing we need to pay attention to is that although Uber is Uber's China branch, Uber still has some differences from Uber in the global market. Uber's most important product in China is UMP, which is basically similar to the Drop Express feature. Uber is, to a large extent, only a subset of Didi, or can only be said to be a competitor to DDT. This merger is not equal in itself.

Third, the two sides involved too much interest, who refused to give up

Although DDT and Uber have a number of co-investors, this is also seen as a basis for the possible merger of the two companies, but one thing we need to understand is that there are even more different investors. In the capital market, it is normal for investors to vote first and second at the same time. Like Alibaba and Jingdong in the e-commerce market set off a wave after wave of war, can be described as a match, but the two sides still have a common investor.

In the face of merger rumors, Zhu Jingshi, head of the Didi strategy, made clear in the past two days that “On April 10th this year, Dickey exceeded 10 million for the first time, and the current daily orders have exceeded 16 million, a quarterly increase. 60% of the speed is rapid, and at the same time, there are nearly 300 of the 400 cities that have been profitable and will soon be profitable. It will be the only winner."

When Uber founder Travis Kalanike attended a forum in China in June this year, he clearly stated that UBER and Didi will not merge, and expressed that this trip between the two Chinese and US Internet companies is a battle for travel services. Far from ending.

Zhu Xiaohu, managing director of venture capital investment at Jinsha River, said at the NetEase Future Technology Summit on June 28 that “I have been the first Chinese investor to enter the Uber San Francisco headquarters global combat conference room three years ago, and I have recommended TK to invest 5 % of the shares, the Chinese market is fully handed over to Didi, unfortunately TK appetite too! With the further escalation of the arms race between the two sides, involving more and more strategic interests, the possibility of merger has almost no ..... .. The strategic investors on both sides have become more and more complicated, and everyone has their own demands. I think the possibility of talking about merger is almost gone."

Fourth, the merger is actually a double loss, directly killing each other's imagination

On the surface, the merger of Didi and Uber will create a super giant in the Chinese travel market. However, if we look at the strategies of the two companies, the merger is undoubtedly a double-loser.

Simply analyze the performance of the two companies.

In January of this year, Didi Travel announced that the total number of orders for all platforms in 2015 reached 1.43 billion, surpassing the cumulative number of 1 billion orders that Uber achieved last Christmas. Uber Global CEO Travis Caranik announced on July 19 that Uber’s total order volume will reach a new milestone of 2 billion. According to Zhu Jingshi’s latest statistics released by Didi, “The first time on April 10th this year exceeded 10 million for a single day, and orders have exceeded 16 million for the current date”, and the total orders for Didi Chuqi as of July should be exceeded. Roughly equal to Uber.

Let's look at the valuation comparison between the two companies. Last month, Uber acquired a US$3.5 billion sovereign wealth fund in Saudi Arabia, which has a Uber valuation of US$62.5 billion. In May, Apple invested US$1 billion in a trip to China’s taxi application giant. At this time, the valuation of Didi’s trip climbed to US$28 billion.

This creates an anomalous phenomenon. Uber and Didi also focus on the travel market, but both are generally equal in terms of volume, and even if the total order volume may have completed the Uber's overtaking, the The valuation is less than half of Uber. We can analyze this because there are some differences in the two company models and technologies, but I am afraid that more factors are still "Uber is an international company."

This is the key reason why Didi is actively exploring overseas markets after it has occupied the Chinese travel market. Now Didi is bent on exploring a viable international road. In fact, while Uber and Didi seized the Chinese market, Didi also invested Uber’s largest competitor Lyft in U.S., Ulabob, Uber’s biggest competitor in the Indian market, and Grab, Uber’s biggest competitor in Southeast Asia.

Obviously, Didi hopes to compete with Uber in the global travel market and eventually get a higher valuation than Uber. From this perspective, it is very difficult for Didi to accept the merger with Uber, because once it is merged, it is bound to reach a certain compromise and slow or even stop the pace of overseas expansion.

For Uber, the combination of Uber and Dick is also an unwise choice. Uber’s incredible high valuations are largely recommended as “the only coverage of the global market”. Once Ubuntu is sold to Chinese competitor Didi, this will mean that Uber's global expansion measures cannot be effective in the world's largest travel market. When Uber is actively exploring markets outside the United States, such news is likely to cause Uber's global valuation to panic collapse.

In conclusion, the competition between Didi and Uber is different from the previous 58 and the fair, Ctrip and Go, Youku and Tudou. It is not only the fight between the two worlds, but also the two. Battle between different modes. Under this irreconcilable contradiction, I think the possibility of merger is really low.

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