Alibaba and Tencent taxi-hailing apps to merge

Chinese internet groups Alibaba and Tencent have put aside fierce rivalry to merge their popular taxi-hailing applications.

Alibaba-backed Kuaidi Dache and Tencent's Didi Dache said over the weekend they had completed a '"merger" that leaves the two app companies operationally independent and keeps both chief executives in place.

The combined company would be worth about $6bn, local media calculate based on recent fundraisings. Last month, Kuaidi Dache raised $600m from Japanese telecoms group SoftBank and existing shareholders while Didi Dache raised $700m in December.

The two firms are neck-and-neck in China's competitive market, with the potential for expanding mobile payment systems the prize for their backers. Kuaidi Dache ("Speedy taxi") had 54.4 per cent market share in China as of the third quarter, while Didi Dache ("Honk Honk Taxi") had 44.9 per cent market, according to Analysys International, a research group.

Although China has a series of antitrust regulations, they have rarely been applied to big domestic companies, either state-owned or private.

The two gave no detail on how they are defining a merger that entails few obvious synergies and a high degree of de facto independence.

"The combined company expects to conduct the businesses of Kuaidi and Didi independently under separate brands. The co-CEOs are especially grateful to the company's shareholders for their support of the company's independent operations," the two companies said in a statement.

The duo use two incompatible payment systems: Kuaidi Dache has Alibaba's Alipay, and Didi Dache uses Tencent's mobile payment system. Their announcement did not say which system they would adopt, or whether they would in future accept both systems.

In December, China's third big Internet company Baidu agreed to buy into US-based taxi-hailing app Uber, whose rollout has proven controversial in many countries including China.

The three Internet giants each have a regional power base - Tencent in the south, Alibaba in the Yangtze Delta and Baidu in Beijing - and a history of backing similar but rival products.

Taxi-hailing apps are extremely popular in China's largest cities, where rush-hour taxis are so hard to find that unlicensed cabs run a thriving business. Regulators have cracked down on private cars using apps in a bid to protect state-regulated taxi companies whose fares are capped. Many of China's largest taxi companies are ultimately owned by municipal government entities.

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