Following the trail of Ola’s acquisition of TaxiForSure, US-based Uber is also now looking forward to buying Meru Cabs. This plan is big and follows in a bid to boost market share. Uber will be looking at buying a majority stake in the Indian company. India Value Fund Advisors (IVFA) owns around 80% stake in Meru Cabs and may want to continue holding a minority stake post the deal.
Mumbai-based Meru cabs was founded by Neeraj Gupta in 2011 and currently, it has operations in 15 cities and looking forward to expand its operations in other cities as well. Meru’s operating model is anti-Uberish. Simply put, Meru owns its inventory, while Uber is an aggregator – i.e. zero inventory, high number of transactions and high margin. For Uber, owning inventory translates to increasing liability.
IVFA has been looking at various options in order to monetize its holdings in Meru Cabs and has even toyed with the idea of an Initial Public Offering (IPO). But with competition hotting up due to Ola looking at buying Taxi For Sure, Uber has become aggressive in its strategy and that could turn out to be the prime driver for consummating the deal.
Meru Cabs at present is valued at around $400 Mn and was unavailable for any comment to any query. But Chief Marketing Officer Rathin Lahiri denies that the company is in discussions for any acquisition. He says about Meru’s expansion plans in India. He says more than half of Meru’s business now comes from its app, which was launched as late as October last year. And 70% of its business comes from the app and web combined.
The app based taxi service provider market has seen lot of action in the past few weeks. And, if this deal is successful, IVFA might sell a part of their stake and also, a fresh equity can also be issued in order to put more money into Meru Cabs.