Lyft Inc. tried to sell itself to some major companies in private negotiations but Uber Technologies Inc., the primary prospective acquirer, allegedly declined the offer to buy this transportations network company based in San Francisco. Both Lyft and Uber decided not to make any official claims yet, due to the private nature of the discussion.
Lyft was launched in 2012 as a mobile app that connected passengers and drivers when a ride is needed. The platform operates now in 200 cities in the U.S. and works with several major companies like General Motors, Alibaba, and some venture capital agencies like Janus Capital Management and Founders Fund.
Uber, from enemy to possible owner
Uber Inc. develops and operates Uber, a mobile app that allows users to find a driver with their smartphone, connecting potential passengers with drivers who use their cars. The company has been expanding since 2011 and is now available in more than 60 countries, covering about 500 cities worldwide.
The nature of Uber and Lyft positions them as competitors in the transportation market, providing a wider range of transportation options to users but creating some tension with the antitrust and legal environment in the U.S.
People familiar with the industry have said that Uber had tried to weaken Lyft’s reach and contact with investors to diminish their value in the market, while Lyft had invested significant costs to surpass Uber in major U.S. cities.
However, Uber have considered purchasing Lyft since 2014, so this is not the first time the San Francisco-based companies discuss this possibility. However, Uber is not willing to buy the company for more than $2 billion, while executives at Lyft are not ready to accept such a low offer since they were expecting deals above $8 billion.
Travis Kalanick, Uber Chief Executive Officer, said that if Lyft is merged with Uber, the company will face intense regulatory scrutiny, which puts Uber in a vulnerable situation. Therefore, the company is not convinced to sign an agreement due to these antitrust concerns linked to the acquisition of Lyft.
More private negotiations
Besides Uber, General Motors was among the main companies Lyft considered, but apparently, GM has decided not to make an offer yet.
GM seems, however, the best option for Lyft so far since they valued the transportation company at $5.5 billion, an amount closer to what Lyft is expecting. But the discussions have been very informal, and executives have declined to comment, considering the privacy of the negotiations.
Qatalyst Partners, a global investment bank and financial and strategic consulting agency, have been helping Lyft to make a list of possible acquirers, which so far includes Amazon, Apple, Alphabet Inc. and Didi Chuxing, a Chinese company who is buying Uber China.
Uber China merged with Didi Chuxing after a long business battle that ended in a $35 billion agreement. A lot of rumors about the link and tensions between these companies have been discussed on the web.
“In Uber, Didi and Lyft had a common adversary. Didi and its Chinese backers had funneled money to Lyft, even making their systems compatible. The possibility of an Uber-Lyft merger gave Didi executives pause, giving them the impetus to pursue a deal with Uber, according to investors,” the Wall Street Journal reported.
Source: Bloomberg