The ride-hailing company is looking to sell and has been in talks with various tech companies
The merger of Didi Chuxing and Uber in China seems to be hurting Lyft — so much so that the company is looking for a potential buyer, according to The New York Times. The company has been in talks with various tech companies but no final deal has been reached yet. As per the latest funding round, the company was valued at $5.5 billion, but is seeking $9 billion in a buyout offer.
Lyft has been in talks with Uber, Didi Chuxing, Apple, Amazon, Google, and General Motors. It even brought down the asking price to attract bidders, but no official bid was received by the company.
Earlier reports indicated that General Motors was interested in buying Lyft but did not proceed with negotiations or placed a bid. GM invested $500 million in the company earlier this year and is slowly making way into the ride-hailing industry. GM launched its own car-lending app and acquired a startup, Sidecar, to develop its own app.
Lyft has hired Qatalyst, an investment bank, to help find a suitable buyer — a common practice among companies looking to sell. Lyft, however, is in no danger to close down, with a free cash flow of more than $1.4 billion. The availability of cash allows the company to continue its operations.
The company believes it can grow in the future. Its revenue grew more than six folds between 2014 and 2015. In July, Lyft set a record when it completed 13.9 million rides for the month, with more than 3 million active passengers. It also added 50,000 new drivers and 825,000 passengers the same month.
The search for a possible buyer could be a result of the merger between Uber and Didi Chuxing in China. Uber has been the market leader in US where Lyft earns majority of its revenue. With Uber no longer operational in China, Lyft will have more free cash to invest in other regions and expand.
Lyft is part of the strategic partnership with Didi Chuxing, Ola, and Grab to take on Uber worldwide. Apparently, the companies have formed a grand alliance to take on Uber as individually they are too small to do so. The merger has totally changed the landscape of the ride-hailing industry.
Operating as an independent company in the current hostile environment is no easy task. Companies often face lawsuits and need to expand in different regions to keep profits up. It seems Lyft will continue to operate independently unless it cuts down the asking price.