ET BureauBENGALURU: TaxiForSure co-founders Raghunandhan G and Aprameya Radhakrishna may have to step down after the company is merged with larger rival Ola, which, however, is expected to retain the cab aggregator's top management and other employees, according to three persons with direct knowledge of the developments.
Ola is in an advanced stage of finalising a deal to buy TaxiForSure at an estimated $200 million (Rs 1,250 crore) in stock, as it sets to take on the heavily funded Uber for dominance of India's taxi aggregation market. The deal is expected to close later this week.
"The deal is being signed at about $200 million in mostly stock-swap with a swapping ratio of about one Ola share for seven TaxiForSure shares," an investor in TaxiForSure said.
The merger is essentially being driven by investors in the two companies to form a strong taxi alliance against Uber. Ola and TaxiForSure will continue to operate as separate brands, at least for a while — as Flipkart did with Myntra and Naspers' Ibibo with redbus, according to one person aware of the developments. The deal will give Ola — which has at least 3,200 employees and operates in 67 cities — a ready workforce of 1,500 trained call-centre, onboarding and operations executives, adding muscle and reducing the time the company will need for further expansion.
"After the transition period is over, TaxiForSure founders — who will be mostly paid in cash — are likely to exit the company. That is the agreement," the TaxiForSure investor said. Raghunandhan, CEO, and Radhakrishna, director, each own 5.5% in the company.
The transition, or merger, is expected to take 6-18 months to complete.
TaxiForSure and Ola did not reply to email queries from ET. TaxiForSure's 1,500 employees across 40 cities in India have been assured their jobs are secure, a top executive at the company said. "We are taking all measures to ensure that there will be no casualties if the deal (with Ola) is done," he said. "Start-ups are high growth companies unlike large conglomerates, where there is a consolidation in positions," said Harish HV, partner at Grant Thornton India. "In startup acquisitions, most employees are likely to be absorbed. The timing of exit of founders in mergers is situational. It is decided as part of the deal and depends upon the strategy and intent of the acquiring company."
TaxiForSure's employees, however, may be re-assigned different roles. "There may be some reorganisation that takes place, but all in all, employees will not suffer the consequence of the merger. At the pace at which Ola is growing, they will be absorbed by Ola," the Taxi-ForSure investor mentioned above said.
(With inputs from Harsimran Julka in Delhi and Madhav Chanchani in Mumbai)
Ola is in an advanced stage of finalising a deal to buy TaxiForSure at an estimated $200 million (Rs 1,250 crore) in stock, as it sets to take on the heavily funded Uber for dominance of India's taxi aggregation market. The deal is expected to close later this week.
"The deal is being signed at about $200 million in mostly stock-swap with a swapping ratio of about one Ola share for seven TaxiForSure shares," an investor in TaxiForSure said.
The merger is essentially being driven by investors in the two companies to form a strong taxi alliance against Uber. Ola and TaxiForSure will continue to operate as separate brands, at least for a while — as Flipkart did with Myntra and Naspers' Ibibo with redbus, according to one person aware of the developments. The deal will give Ola — which has at least 3,200 employees and operates in 67 cities — a ready workforce of 1,500 trained call-centre, onboarding and operations executives, adding muscle and reducing the time the company will need for further expansion.
"After the transition period is over, TaxiForSure founders — who will be mostly paid in cash — are likely to exit the company. That is the agreement," the TaxiForSure investor said. Raghunandhan, CEO, and Radhakrishna, director, each own 5.5% in the company.
The transition, or merger, is expected to take 6-18 months to complete.
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TaxiForSure's venture capital investors — Accel Partners, Helion Ventures Partners, Bessemer and Blume Ventures — will roll over their shares into the combined entity and take a small portion of the consideration in cash.
"Most of the shares held by TFS investors are getting rolled over to Ola as they did not agree to a complete share deal. Around 20% of the deal is cash," an investor in Ola said.TaxiForSure and Ola did not reply to email queries from ET. TaxiForSure's 1,500 employees across 40 cities in India have been assured their jobs are secure, a top executive at the company said. "We are taking all measures to ensure that there will be no casualties if the deal (with Ola) is done," he said. "Start-ups are high growth companies unlike large conglomerates, where there is a consolidation in positions," said Harish HV, partner at Grant Thornton India. "In startup acquisitions, most employees are likely to be absorbed. The timing of exit of founders in mergers is situational. It is decided as part of the deal and depends upon the strategy and intent of the acquiring company."
TaxiForSure's employees, however, may be re-assigned different roles. "There may be some reorganisation that takes place, but all in all, employees will not suffer the consequence of the merger. At the pace at which Ola is growing, they will be absorbed by Ola," the Taxi-ForSure investor mentioned above said.
(With inputs from Harsimran Julka in Delhi and Madhav Chanchani in Mumbai)
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