Uber and Rapido are two prominent ride-hailing giants that have revolutionized India’s transport sector. Are the two merging? Is the path being paved for a merger? How much truth is there to this? Intense speculation gripped the transport sector recently following reports that Uber’s CEO held secret talks with Rapido’s management regarding a merger during a visit to India. However, it appears the mega-deal stalled due to strategic disagreements between the two companies concerning business control and rights. What exactly transpired during those discussions? Let us delve into the details of why the deal fell through.
Negotiations for a domestic merger between the American ride-hailing giant Uber and the Indian startup Rapido proved unsuccessful. The proposal surfaced in May of this year during Uber CEO Dara Khosrowshahi’s five-day visit to India. Top executives from both companies held extensive discussions aimed at addressing fierce market competition, reducing cash burn, and strengthening their business operations. Uber had envisioned merging its operations with Rapido and handing over management responsibilities to Rapido’s leadership.
However, Rapido put forward a counter-proposal. They proposed acquiring Uber’s Indian operations entirely through a cash-and-stock transaction, while offering Uber a minority stake in Rapido. However, Uber was unwilling to completely relinquish control over the strategically crucial Indian market. Although it sold its Uber Eats business to Zomato in 2020, Uber did not want to lose its foothold in the core ride-hailing segment. The deal stalled at the preliminary stage because the two companies could not reach a consensus regarding ownership rights.
Currently, Rapido dominates the bike-taxi segment and holds a 50% share of the overall ride market, while Uber maintains a strong position in the four-wheeler cab segment with a 40–45% share. Had this merger materialized, Ola would have been the only major competitor left in the Indian transport sector, a scenario that could have impacted market competition. Meanwhile, Rapido has denied reports of the merger, and both companies are currently expanding their operations independently. To compete with Rapido, Uber has also recently expanded its bike-taxi services to approximately 220 cities and is gearing up for new challenges.