China’s two biggest bike-sharing unicorns – Mobike and Ofo – could be heading toward a mega-merger that would create a single dominant industry player, according to Caixin.
The two companies have burned through billions of dollars of investors’ cash over the past two years in a bid to undercut each other on prices and flood the market with their brightly-colored bikes. But several backers of the companies are now calling for the pair to end their costly war and tie the knot, Caixin reports.
One source told Caixin that profits remain a distant target for both Mobike and Ofo as the cash-burning goes on. Allen Zhu, an early investor in Ofo, said in September that a “merger is the only way out” for the two companies.
Another source said that as of Dec 1, Ofo only had 350 million yuan ($53 million) in cash left, while Mobike had 7 billion yuan. The source, who is familiar with the companies’ financials, said both companies have each spent more than 3 billion yuan from users’ deposit funds – which rules suggest shouldn’t be touched – for outstanding payments to their suppliers. The companies deny that they have spent deposit funds.