Ofo’s chief executive says he would turn down a US$10 billion offer for Chinese bike sharing firm
Ofo’s chief executive Dai Wei said in an internal company meeting on Friday that while he was prepared to listen to takeover offers for the Chinese bike-sharing start-up, there probably wasn’t an offer good enough and even US$10 billion would not seal the deal, according to people who attended the meeting.
“There will be no future for the company if it is sold, except a short-term cash reward,” said Dai, according to the people, who asked not to be identified because the meeting was private. Dai also told employees that the company had not already been sold, rebutting a Chinese media report which quoted anonymous sources as saying Didi Chuxing and Ant Financial would together acquire Ofo for US$1.4 billion.
“Totally fake news. Firstly the price is not right, secondly there was no acquisition,” said Dai during the meeting. “We were severely hammered by this fake news,” he said.
Dai rejected a potential acquisition offer from ride hailing giant Didi, Ofo’s largest institutional shareholder, in May, the Post reported earlier. However, Didi restarted talks with the bike sharer recently, according to people familiar with the situation who declined to be named because the information is not public. A person familiar with the talks said Dai’s personal style as an entrepreneur had been a factor in the negotiations.
A Didi spokeswoman declined to comment.
Ofo has encountered cash flow problems amid fierce competition with the Meituan Dianping-owned Mobike and Ant Financial-backed Hellobike – in an industry where no participant has yet to turn a profit. Ofo hasn’t delivered payments to two vendors – an SMS service provider and a chip and telecoms service provider for its smart locking device – for more than half a year, according to the companies. The amounts involved top US$3 million, the service providers said.
Ofo didn’t immediately respond to a request for comment on the status of these payments.
Ofo will need to raise fresh funds at some point unless it can soon turn a profit, and has begun retreating from overseas countries to focus on key markets. It has come under increasing pressure after rival Mobike announced it was going deposit-free last month to gain a larger slice of the maturing bike share market. Ofo still charges users 199 yuan (US$29) as a deposit.
In May, Ofo’s daily active users reached 7.3 million, Mobike’s 6.2 million, and HelloBike had 114,300, according to iiMedia, a China-based market research firm. However, China’s bike sharing industry is expected to slow this year, with the number of bike-sharing users in the country forecast to grow 14.6 per cent in 2018, a steep drop from growth of over 600 per cent in 2017, according to an iiMedia report.
This forecast does not seem to have deterred Dai.
“We were doing great before and we were also criticised,” Dai said at the meeting, “We will be great again.”