Daimler Targets Uber by Merging Mytaxi With U.K.’s Hailo

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  • New company will be Europe’s largest taxi hailing service
  • Daimler sees ride-booking services as strategically important

Daimler AG will challenge Uber Technologies Inc.’s ride-hailing dominance by merging its Mytaxi unit with one of the U.K.’s most popular cab-calling services, Hailo, to create Europe’s biggest taxi app.

The combined company will operate under the Mytaxi brand, with 100,000 registered drivers in more than 50 cities across nine countries, and be headquartered in Hamburg, the companies announced Tuesday. Daimler will own 60 percent of the new business, while Hailo’s existing shareholders will hold 40 percent, said Hailo Chief Executive Officer Andrew Pinnington, who will lead the new company. Financial details weren’t disclosed.

“Having the resources this deal gives us is much better than being a venture-backed business when looking for new funding and trying to compete with regional leaders and those 800-pound gorillas around the globe,” Pinnington said in an interview.

Car manufacturers have been investing heavily in apps to keep pace with changing consumer habits that have seen ride-sharing companies such as Uber and Lyft Inc. proliferate. General Motors Co. has invested $500 million in Lyft, Volkswagen AG put $300 million into Israel-based Gett Inc., and Toyota Motor Corp. backed Uber for an undisclosed amount. Uber has raised at least $12.5 billion in funding to date.

Daimler, the maker of Mercedes-Benz cars, also owns the Car2Go car-sharing service and purchased Mytaxi in September 2014. It bought U.S. ride-booking service RideScout LLC at the same time. 

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“The joining of Mytaxi and Hailo is another strategic step in making us a leader of mobility solutions and platforms,” Klaus Entenmann, chairman of Daimler Financial Services AG, said in a statement. He said Daimler had invested 500 million euros ($550.7 million) in such platforms and services to date and that it was “prepared to make further strategic investments” in the future.

Hailo, which opened for business in 2011, had raised $100 million from venture capital investors, including Accel, Atomico Ventures and Virgin Group founder Richard Branson, among others. It initially expanded to the U.S. and Canada, then pulled out of those markets in 2014 in the face of stiff local competition. The company’s existing engineering and development team in London will now gradually shift to Hamburg. Mytaxi founder Niclaus Mewes will sit on the board. 

Both Hailo and Mytaxi also use only licensed taxi drivers, in contrast to Uber, which has run into regulatory difficulties in many European countries over the use of unlicensed drivers, non-metered fares and discounting. 

“This is about improving the status quo rather than completely destroying the status quo,” Pinnington said of Mytaxi’s model.

He also said the combined company will focus exclusively on Europe for the immediate future and would not seek to expand to other regions.