Mahindra Acquires 55% Stake in Meru Cabs to Take on Ola & Uber

Mahindra & Mahindra recently suffered a slump in August on a year-on-year basis.

Mahindra & Mahindra has acquired 55 percent of Meru Cabs.

(Photo: The Quint)

Mahindra & Mahindra (M&M) is finally stepping into the shared mobility space as the company has decided to acquire 55 percent stake in Meru Cabs for a whopping Rs 201 crores, the company has announced in an exchange filing on Sunday.

The acquisition will take place in multiple stages with the first stage of the acquisition taking place in October.

With this acquisition M&M is all set to take on bigger players in the market like Ola and Uber. With this investment, Meru's largest shareholder - private equity firm True North, will now have lesser say in the overall management of Meru, down from 80 percent to 35 percent.

Meru was one of the first cab hailing and radio taxi services to start across different metro cities in India which commenced operations back in 2006.

True North first invested in Meru back in 2007, investing approximately $80 million in the company.

Meru had been struggling to keep a strong hold on the Indian market after aggregators like Ola and Uber entered the shared mobility space.

It started losing the battle when both Ola and Uber reduced fares down to almost Rs 6/kms, while Meru continued to charge as much as Rs 16/km from consumers. 

This moves comes after Mahindra and Mahindra reported a 26 percent decline in domestic sales in August on a year-on-year (YoY) basis.

The company sold a total 33,564 units of vehicles during the month in the country, against 45,373 units during the corresponding period last year.

Apart from M&M, other automobile makers have also invested in ride-hailing start-ups.

Kia and Hyundai Motors announced a $300 million (Rs 2,100 crore approx) investment in Ola earlier this year, while both Hyundai & Toyota have invested in Grab which is a South-East Asia based company.

Also, Toyota also invested approximately $500 million (Rs 3,500 crore approx) in Uber last year, while British car maker Jaguar Land Rover has invested $25 million in Lyft.