BUSINESS Ofo co-founder denies acquisition rumors

BUSINESS

Ofo co-founder denies acquisition rumors

CGTN

05:50, August 04, 2018

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(Photo: CGTN)

Yu Xin, co-founder of Chinese bike-sharing startup ofo, denied reports that Chinese ride-hailing giant Didi Chuxing and Alibaba's financial affiliate Ant Financial had jointly acquired the company for 1.4 billion US dollars.

"(Someone) wants to make big news, but it is fake news. It is too fake that I even do not want to make an official statement. Use your brain a bit," Yu said in a comment in his WeChat Moments, a Facebook-like function of the mobile social-network app WeChat.

Earlier on Friday, a report by tech.ifeng.com quoted a bike-sharing industry insider as saying Didi and Ant Financial have signed a framework agreement with ofo.

The report said the bid talks are close to the end as ofo is underpriced at 1.4 billion US dollars by the two buyers.

Reports on an ofo acquisition continued to dribble out recently. Some said Didi and ofo discussed the bid many times, but details about their talks remained unclear as no final agreement was reached.

On Monday, online technology media platform 36Kr reported Didi was offering ofo 1.5 billion US dollars and continuing to undercut the price.

The acquisition on ofo has been stuck in a stalemate for a while as the startup is unsatisfied with the prices proposed by its potential buyers, the report said.

Since it was founded in the summer of 2015, ofo has become one of the two highest-profile and biggest-scale bike-sharing companies in China and has secured the investments of giants and institutional investors, such as Alibaba, Didi, Ant Financial and MatrixPartners China.

From its multi-million yuan angel round of financing in March 2015 to the 866 million-US-dollar E2-1 round of financing this March, the accumulative amount of financing publicly announced by ofo has already surpassed 2.1 billion US dollars, according to a report by tech.ifeng.com.

In the bike-sharing market, ofo has been involved in a rat race with its largest rival Mobike. In April, China's largest provider of on-demand online services Meituan-Dianping acquired and took full control of Mobike at a price of 2.7 billion US dollars.

Reports said ofo faces a shortage of funds.

In May, while the funds available in ofo's accounts were no more than 500 million yuan, its cost was up to 250 million yuan for the single month, of which the operation and maintenance costs were 130 million yuan and the other costs were 120 million yuan, according to a report by Caixin.

The company has been trying to branch out into other businesses such as blockchain, loan supermarket and information flow to ease the tight cash flow situation, but it is hard to make a change in the short term, tech.ifeng.com and 36Kr reported.

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