Revving Up Interest: Uber and Ola are in early talks to acquire Addison Lee
August 12, 2019
2 min read
What's going on here?
Two giants in the ride-hailing app industry, Uber and Ola, are amongst “a handful” of firms in recent discussions with Addison Lee’s management team concerning a possible acquisition.
What does this mean?
Having signed a non-disclosure agreement with private equity firm Carlyle (the owners of Addison Lee), Uber and other prospective bidders, including Indian-owned hailing firm Ola, have foreshadowed the possibility of a takeover of premium minicab brand Addison Lee. Although nothing has been confirmed yet, such an acquisition could be huge for either Uber or Ola.
What's the big picture effect?
A large-scale acquisition like this is exemplifies how competition can be dealt with if a company has the capital. Addison Lee currently has 5,000 cars in London, holding circa 10% of the minicab market. If the discussions go further and a formal bid is made, Uber and Ola would see a substantial increase in their market share of the fast growing private-hire market.
In turn, this could result in the opening of a new competitive front on the private hire taxi market. If the market share is too great from the possible acquisition, it is probable that the Competition and Markets Authority (CMA) will undergo an investigation to ensure fair competition is upheld. This shows that although Addison Lee’s acquisition could bring many benefits, it also puts fair competition at risk as it increases the chance of a monopoly in the private car hire industry.
However, it is clear that these discussions are currently only in the early stages of a complete deal and no formal offer has yet been made. It is possible that nothing will materialise. Whilst no time limit has been set by any party involved, it has been said it would preferably be before the refinancing of Carlyle’s debt in summer 2020.
Report written by Callum Tanton-Parham
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