Once Sworn Enemies, Uber Said To Be In Talks to Acquire Meru Cabs

After an uber-rough and a relatively forgettable 2014, the US based taxi service Uber is now looking forward to strengthening its hold in the organized taxi service business.

Still banned from operating in the Indian capital and many other Indian cities after the infamous rape incident, the $40 billion company is now eyeing acquisition of homegrown Meru cabs, hoping the latter can salvage the trouble stricken service provider out of trouble.

With presence across 11 Indian cities, India is the largest market for Uber outside India and though they are banned in the states of Karnataka, Maharashtra and UP besides the two cities of Delhi and Chandigarh, they have not yet given up and are looking forward to gain an entry into the market once again.

Meru, the first radio taxi service in India, on the other hand is choked for funds and looking for some cash infusion to manage to stay afloat in the organized taxi market. Neeraj Gupta, the founder and managing director of the company had talked about the company looking forward to raising a $100-150 million to “fund expansion needs and technology upgrades” to Business Standard only recently.

At the same time, Meru is not among the cab operators which were recently banned due to non-compliance with rules. That means Uber could get a chance to enter the lucrative app based taxi rental service once again by hitching on to Meru’s back.

After the Delhi authorities refusing to lift the ban on Uber and asking them to apply for licence once again, this buyout (if it indeed does get underway) could help Uber overcome its licensing problem with immediate effect. All the same, it will give Meru the much needed funds for expansion and growth.

Meru, with a solid presence in 15 Indian cities and a 45 percent market share in Delhi, Uttar Pradesh, Maharashtra, Rajasthan, Gujarat, Karnataka, Andhra Pradesh, Telengana, Tamil Nadu and West Bengal, has a wide geographical setup which will work out to Uber’s advantage in term of both administration and logistics.

Looks like a win-win situation for both the parties concerned.

Meru cabs, it is being rumoured, are expecting a $400 million valuation and there have been early indicators pointing towards Uber looking to buy a majority stake in their company.

At present, India Value Fund Advisors (IVFA) has an 80% stake in Meru and they may want to continue holding a minority stake if the deal gets through. The proposed acquisition might result into IVFA selling its stake and floating an IPO to raise more funds for the company.

The acquisition also needs to be seen against the backdrop of Ola Cabs’ buyout of TaxiForSure last week.

Politics and Business make the strangest bedfellows!

Meru was, not too long ago, had daggers drawn at Uber. After they lost a sizeable market share due to Uber’s entry they were the ones who has filed a complaint to the RBI about Uber evading the two step authentication in its payment method. Following that complaint, the Boston headquartered service had tweaked their business model and tied up with Paytm owing to the backlash from RBI.

At present, no one from Meru cabs was available to respond to a media query about the takeover rumours while the Uber representatives have declined to elaborate on the issue.

The takeover, when complete, will clearly necessitate a new working business model different from both Meru and Uber at present. While Meru is only another fleet of branded taxis, Uber is an app based service- making the two as different as the proverbial chalk and cheese. Uber might go on to become just another provider of taxi services in India after taking over Meru rather than acing as a mediator between passengers and cabbies via their app.

Whatever the outcome, there is no denying that the deal has come at just the perfect moment for both the parties concerned.