Didi hits the road with $900m deal for Brazil's 99

China’s ride-hailing giant heads into a new battle with US rival Uber by acquiring Brazilian peer 99. It paid $600m for the stake and pumped $300m into the company, source says.

China’s homegrown ride-hailing app Didi Chuxing is taking its battle against Uber to the international stage after it agreed to acquire its Brazilian counterpart 99 on Thursday, marking the company’s first foray outside the domestic market it dominates.

Privately held Didi Chuxing did not disclose financial details of the transaction. According to a source familiar with the situation, Didi has paid $600 million for the stake it does not already own, plus another $300 million of capital injection into the target company.

The deal sets the stage for an epic battle between Didi and Uber in a market the latter dominates. It also presents Didi with the problem of navigating a foreign market's changing regulatory environment – an issue that has proved challenging at home.

Didi has been a shareholder in 99 since January last year after investing $100 million in the five-year old company, which is Uber’s biggest rival in Brazil. Tiger Global Management and Qualcomm were among 99's other investors.

By taking over the Brazilian car-hailing app, Didi has put its overseas expansion plan into practice – an initiative the company started planning last year after it claimed to have more than 95% share of the local ride-hailing market.

"Globalisation is a top strategic priority for Didi,” company founder Cheng Wei said in a statement on 99’s acquisition. “With enhanced investments in AI capabilities and smart transportation solutions, we will continue to advance the transformation of global transportation and automotive industries through diversified international operations and partnerships.”

The transaction came less than three weeks after Didi announced a $4 billion fundraising from Japan’s Softbank and the Abu Dhabi government in late December, a deal that valued the high-flying startup at over $50 billion.

Difficult market

Didi has invested in overseas car-hailing start-ups such as Singapore’s Grab, India’s Ola, Dubai’s Careem and Lyft in the US. But it is the first time the company has acquired a foreign firm.

By investing in Brazil, the Chinese company has apparently made a bold bet.

Due to its large population, Brazil is among the world’s best business locations for online car booking applications. But at the same time, it is also one of the least regulated and most risky markets.

In October, Brazilian lawmakers proposed new regulations that would have required drivers for car-hailing apps to obtain special license plates and own their vehicles. That would have greatly reduced the number of eligible cars and effectively banned part-time drivers if passed.

The bill was amended after vigorous protests by car-hailing apps and their drivers, who claimed the government was too conservative in failing to embrace technological advancement and warned the rules could kill thousands of jobs.

However, other proposed regulations – including new taxes on car-hailing apps, mandatory insurance for passengers, pension benefits for drivers, and regular checks on cars – are still being discussed and could take effect later this year. That would create a tougher business environment for companies like Uber, 99 and Spain-based rival Cabify.


Didi’s entry into Brazil marks the beginning of the second contest against Uber, which lost its battle against the Chinese firm in its local market in 2016. The global ride-hailing firm sold its China operations to Didi and withdrew from the Chinese market that year. 

However, it remains unclear whether Didi can replicate its success outside its home country. For one, Uber has a much stronger foothold in Brazil and has over 80% share of the country’s car-hailing market. By comparison, Didi was already the bigger player, controlling over 80% of the Chinese market when the merger with Uber was sealed two years ago.

As it stands, 99’s much smaller scale compared to Uber makes it more difficult to recruit drivers and to maintain a sizable fleet.

Meanwhile, it is unlikely Didi will replicate its cash-burning strategy in Brazil at a time when regulations surrounding the car-hailing industry remain unclear. This further limits 99’s financial capability to compete with Uber and other rivals.

¬ Haymarket Media Limited. All rights reserved.
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