Two premium taxi apps mull tie-up to challenge Kakao

South Korea's two premium ride hailing apps TADA and i.M are considering a merger in a bid to challenge Kakao Mobility Corp., which commands about 90% of the market, according to people familiar with the matter on Wednesday.

The two van service operators  -- VCNC and Jin Mobility -- are undertaking due diligence for a possible tie-up, which might create an entity with a corporate value of some 400 billion won ($325 million).

Details such as a merger ratio have not be confirmed yet.

VCNC offers the TADA van service as a unit of Viva Republica, operator of banking app Toss. Jin Mobility provides mobility services under the i.M brand with spacious seating space.

Jin Mobility was valued at 230 billion won early last year, when it raised 80 billion won in Series A funding.

VCNC' enterprise value was estimated at 100 billion won in 2020, when Viva Republica acquired a 60% stake for 60 billion won.

The stake purchase had been intended to create synergy with Viva Republica's fintech platform Toss by tapping TADA users to offer Toss services.

But after it fails to realize the synergy, it changed tack to seek a merger with another ride hailing platform i.M.

Jin Mobility has bulked up through acquisitions of small taxi operators. It runs some 1,200 taxies on the roads.

If it ties up with the TADA operator, it will be able to increase its fleet of cars in operation and learn the technological know-how from TADA's parent company.

VCNC's flagship van service TADA Next adopts flexile fare systems, under which drivers can charge up to four times its standardized rate.

By comparison, Kakao offers both traditional and premium riding services on sedans and vans, for which it charges different rates.

According to the Bell, a domestic news provider, the most plausible scenario might be that Viva Republica offers its entire 60% stake in VCNC and receives shares of a merged entity in return.

KPMG is working on the possible deal.

Write to Chae-Yeon Kim at why29@hankyung.com
Yeonhee Kim edited this article