Uber wouldn’t pay more than $2 billion to purchase its main U.S. ride-hailing competitor Lyft Inc., even as the later was gauging interest from prospective acquirers, executives from Uber Technologies Inc. told investors in the past few weeks.
Media reports about this development quoting people familiar with the matter had been published recently.
Any form of formal offer has not yet been made by Uber, the media reports suggested. A source was quoted as saying that the two San Francisco companies have discussed the prospect informally and Uber had previously considered purchasing Lyft as far back as 2014.
Uber Chief Executive Officer Travis Kalanick has said privately that he would not support such a deal because he believes it would face intense regulatory scrutiny despite executives floating the $2 billion price tag, sources reportedly said.
Another person familiar with the matter reportedly said that Lyft wouldn’t consider $2 billion to be a credible offer regardless. Lyft had failed to secure serious interests as it had sought as much as $9 billion, Recode reported on Friday. In the past Uber has downplayed Lyft’s value to investors as Uber has every incentive to do so since the companies are fierce rivals. Lyft and Uber declined to comment.
Earier this year Lyft was valued at $5.5 billion by Bottom of Form
an investment from General Motors Co. People familiar with the matter said that in the past few months, GM and Lyft have held informal discussions about an acquisition. The same sources had said that the talks never amounted to a formal offer and that GM had suggested a price of at least $5.5 billion for Lyft. An approach from GM was rebuffed by Lyft, the Information, a technology website, reported last week. The automaker declined to comment.
To solicit interest from potential acquirers, Lyft has been working with Qatalyst Partners. The sources told media that informal talks with Chinese ride-hailing giant Didi Chuxing, Alphabet Inc., Amazon.com Inc. and Apple Inc. were held by Lyft in addition to Uber and GM. Earier on Friday, The New York Times carried a report about those talks.
After a costly, two-year battle Didi said it will acquire Uber’s China business last month. Chinese regulators, which approved a merger last year of Uber’s two largest competitors there is expected to easily approve of the deal.
However in the U.S., the antitrust environment is quite different compared to that in China. Rides have been made more affordable for the average American due to the sever competition between Uber and Lyft. Despite some significant financial losses due ot subsidizing of rates, in major U.S. cities, Lyft has been able to take away market share from Uber so far this year.
Sources close to Lyft were earlier quoted in the media saying that the company currently has $1.4 billion in cash. Hence this big pocket allows Lyft to continue to fight independently against Uber at least in the U.S.
(Adapted from Bloomberg)