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Update: China taxi apps Didi Dache and Kuaidi Dache announce tie-up

Didi Dache and Kuaidi Dache are backed up by internet giants Tencent Holdings and Alibaba Group Holding, respectively.

[BEIJING] Didi Dache and Kuaidi Dache, two of China's leading taxi-hailing apps, said on Saturday they would merge to create one of the world's largest smartphone-based transport services.

Financial terms were not disclosed. The firms said the two companies, which have not announced a name for the combined entity, would operate independently under separate brands.

Didi chief executive Wei Cheng and Kuaidi chief Dexter Chuanwei Lu would become co-chief executives and formally introduce the new business after the Lunar New Year, the companies said.

Didi and Kuaidi, backed by Chinese Internet giants Tencent Holdings and Alibaba Group Holding, respectively, have been locked in a bitter price war for the past year, as each sought to corner the massive Chinese market despite rumors of mounting losses.

Didi was estimated to have a roughly 55 per cent market share, with Kuaidi claiming nearly all of the rest in a December study by Analysis International.

Until the merger, the two companies had been vying for the world's largest transport market - more than 150 million Chinese hailing taxis using their smartphones, according to analysts - and received more than $1 billion from private investors in recent months to sustain their battle for market share.

Didi raised US$700 million from Tencent and Russian private equity fund DST USbank and Tiger Global.

The two CEOs said Saturday they are "especially grateful to the company's shareholders for their support of the company's independent operations." Baidu, the Beijing-based search engine and rival to Tencent and Alibaba in China's Internet sector, said in December it would invest in Uber to help bring the US$40 billion-valued US firm to the Chinese market.