Meituan to fully acquire Mobike

Lifestyle service platform Meituan Dianping yesterday said it will fully acquire bike-sharing startup Mobike in a US$2.7 billion deal.

Mobike’s founding members will continue to lead the management team.

Wang Xing, Meituan’s chief executive, will be chairman of Mobike, and the company said it would connect with Meituan’s existing business such as food and grocery delivery, online travel and ride hailing while maintaining its branding and operational independence. 

“Bringing bicycles back to cities is the heart and vision of Mobike, and the mission of Meituan is to ‘eat better, live better,’” said Mobike’s Chief Executive Davis Wang.

“We will continue to prioritize creating user value as the center of both companies’ business.”

Mobike handles about 30 million rides with 200 million users in domestic and overseas markets. Set up three years ago, Mobike raised US$600 million last June in a financing round led by Tencent to contest its arch rival Ofo, which is backed by e-commerce giant Alibaba. 

Mobike and Ofo have waged a price war to win market share, offering free rides and even cash incentives. However, both have begun phasing out free-riding coupons for bike riders as investors are eager to cut down on their losses.

Yicai.com reported that Meituan will spend US$1.6 billion in cash and US$1.1 billion worth of shares to acquire the outstanding shares of Mobike. 

Meituan, which started as an online platform for ordering food and booking movie tickets, is now facing strong competition after Alibaba bought Ele.me to strengthen the group’s online-to-offline service.

Industry watchers said Meituan will have more muscle to compete against Didi’s ride-hailing business, while Mobike will be better placed to focus on raising operation efficiency.