Image Credit: Ola app

After much speculation, Ola (formerly Olacabs), the online cab booking service in India has today announced that it has acquired rival TaxiForSure for US$200M in a cash and equity deal. With this acquisition, Ola becomes a leader in the taxi aggregator business in India edging out global giant Uber. This is the second-largest buyout in the consumer internet market after Flipkart’s acquisition of fashion portal Myntra last year for approximately US$300 million.

Ola and TaxiForSure will continue to operate as separate entities. The leadership and all of the 1,700 employees shall continue to work with TaxiForSure, with their current COO Arvind Singhal being appointed as CEO. Aprameya Radhakrishna and Raghunandan G, the founders of TaxiForSure, will contribute in an advisory role for a certain period. TaxiForSure is currently in 47 cities with over 15,000 vehicles registered on its platform.

2 is better than 1

There is significant complimentary value that this acquisition adds both on the supply and demand side for Ola and TaxiForSure. TaxiForSure follows a different model of supply and distribution by working with cab operators compared to Ola’s model of working with driver-entrepreneurs. TaxiForSure has also focused heavily on the economy segment of cab consumers offerings like Tata Nanos as part of their fleet and Rs 49 (US$0.79) as base fares in the past. For customers, drivers and operators on the TaxiForSure platform, nothing will change. Customers can continue to book a cab through the app and call centre, and drivers will continue to get access to customers on TaxiForSure’s technology platform.

Ola has been funded by Tiger Global, Matrix Partners, Sequoia Capital, Steadview Capital and most recently Softbank over four rounds of fundraising. Investors in TaxiForSure are Accel Partners, Bessemer Venture Partners and Helion Venture Partners. With this acquisition, investors in TaxiForSure will roll over their stock into Ola.

Founded in Jan 2011 by IIT Bombay alumni Bhavish Aggarwal and Ankit Bhati, Ola is a mobile application for personal transportation, integrating city transportation for customers and drivers onto a technology platform. Customers can access Ola through their mobile application for Android, iOS and Windows. They can book from over 1,00,000 vehicles across 67 cities.