Ola, the largest taxi aggregator in the country has acquired its smaller challenger, TaxiForSure for a price of Rs 1,237 crore that translates to $200 million. This is a deal involving both cash and stock that creates a tough competition between the Bengaluru based Ola backed by SoftBank and its rival Uber headquartered inSan Francisco. Notably, this competition toughens when the app based taxi services are rapidly growing inIndia.
After the deal, Ola founded by IIT Bombay alumni is valued at Rs 8,700 crore that is around $1.4 billion. As per sources that are aware of the transaction details, the deal was done by investors in the two firms and it includes a cash payment for the two co-founders of TaxiForSure.
People familiar with the terms of the deal reveal that TaxiForSure shareholders will get one Ola share for every seven TFS shares that they hold. This acquisition will be the second largest one in the Indian startup segment. The largest one being Flipkart’s purchase of Myntra fashion portal in the last year.
Notably, even after the acquisition, TaxiForSure will be continuing to operate independently. It will be operated by Arvind Singhal who has been promoted from the position of Chief Operating Officer to Chief Executive Officer. The co-founders of TaxiForSure, Raghunandan G and Aprameya Radhakrishna will be taking advisory roles for the next six months. The co-founders owned 5.5 percent of the firm each, and they have received compensation of Rs 136 crore and some stocks in Ola, claim sources. S
Regarding this acquisition, Bhavish Aggarwal, Co-Founder and Chief Executive Officer at Ola claimed that the TFS as a brand can focus on developing its offerings to customers and operator and on saving the resources on funding efforts and combating the competition. He noted that there will be no change when it comes to the customers, drivers and operators view.
Till September 2014, TaxiForSure was backed by Accel Partners and Helion Venture and it was battling with stiff challengers such as Ola and Uber.