Two years after its market debut as the 'first ridesharing stock', Dida Inc (02559) is set to be acquired by Tongcheng Travel (00780).
A joint announcement on the evening of June 29 revealed that Tongcheng Travel plans to launch a voluntary conditional general cash offer for Dida Inc through its wholly-owned subsidiary eLong, Inc. The offer price is HK$1.3875 per share, representing a 12.8% premium over the previous closing price. The maximum total transaction value is approximately HK$1.424 billion for about 1.026 billion shares. This transaction is not aimed at privatizing Dida Inc, which will maintain its listing status on the Hong Kong Stock Exchange. The primary funding source is a HK$1.5 billion loan facility provided by China CITIC Bank International.
Following the announcement, shares of Dida Inc, which had been performing poorly, surged 88.2% the next day, even briefly doubling to HK$2.50 during trading. As of the latest close, the stock price has slightly retreated but remains above HK$2.40 per share, trading at a high level not seen in nearly six months. The company's latest market capitalization is approximately HK$2.484 billion, a 90.6% increase from before the announcement. In contrast, the market appears to be taking a wait-and-see approach towards Tongcheng Travel, whose stock price has fallen for three consecutive trading days, dropping 4.4% to a nearly three-year low of HK$11.67 per share.
Irrevocable Undertakings from Major Shareholders
The core assurance for this acquisition comes from the shareholder level. According to the announcement, five major shareholders of Dida Inc have signed irrevocable undertaking letters. These include the founder team-controlled 5brothers Limited, Smart Canvas Investment Limited (an entity related to Nio Capital's first USD fund, EVE ONE L.P.), Leap Profit Investment Limited (an entity related to Nio Capital's first RMB fund), Star Celestial Holdings Limited (an institutional entity related to Nio Capital), and NBNW Investment Limited (an entity related to William Li's family trust).
These five major shareholders collectively hold approximately 551 million shares, representing about 53.70% of the total issued share capital. Among them, Nio Capital and William Li hold about 231 million shares, a stake of 22.5%, making them Dida Inc's largest external investors. This indicates that Tongcheng Travel has already secured over 50% of voting rights, making the transaction highly certain to proceed.
Analysis based on the prospectus shows that Nio Capital's Leap Profit Investment Limited first invested in Dida Inc during the D-1 round in 2017 at a cost of approximately US$0.4286 per share, with an investment amount of about US$29.13 million. In the E-1 round financing in 2018, Nio Capital invested again at US$0.4950 per share, with its three related entities acquiring about 142 million shares for a total investment of US$70.57 million. Additionally, William Li's family trust-related entity also invested nearly US$10 million in the E round, holding approximately 20.18 million shares.
Based on this, Nio Capital and William Li have cumulatively invested approximately US$110 million in Dida Inc, with an average investment cost of about US$0.4620 per share, equivalent to HK$3.62 per share. Although Dida Inc listed at an issue price of HK$6.00 per share, it experienced a 'Waterloo' moment on its debut, with the stock price falling 22.5% in a single day. It continued to decline thereafter, hitting a low and becoming a 'penny stock' in April 2025. For at least four months prior to the acquisition announcement, its stock price hovered around HK$1.00 per share, resulting in a combined paper loss exceeding HK$600 million for Nio Capital and William Li.
Behind this persistent decline lies Dida Inc's continuously deteriorating performance and its stagnant market position. From 2023 to 2025, the company's revenue was RMB 816 million, RMB 787 million, and RMB 502 million respectively, representing a cumulative decline of 38.5%. The ridesharing business, contributing over 90% of total revenue, saw its order volume drop from 119 million in 2024 to 76.5 million in 2025, with transaction scale shrinking by 38.7% year-on-year.
In 2025, Dida Inc's gross profit margin was approximately 66.3%, a sharp decrease of nearly 6 percentage points from 2024, marking the lowest point since 2019. Net profit recorded about RMB 130 million, a dramatic plunge of 87.1% year-on-year. Even after adjusting for listing-related impacts, its adjusted net profit performance fell short of expectations, decreasing by 34.6% year-on-year to RMB 138 million. In comparison, the company's adjusted net profit was RMB 238 million and RMB 226 million in 2021 and 2022 before its listing.
The ridesharing market has a limited ceiling with few obvious growth drivers. According to Frost & Sullivan research, China's total car-hailing market transaction value is expected to reach RMB 1.24 trillion by 2028, with ridesharing accounting for about 8.4%. The penetration rate is projected to increase by less than 0.5% from 2023 to 2028. Public information shows that after ceding its leading position in the niche market in 2022, Dida Inc's market share has been continuously eroded by major players like Hello, DiDi, and Gaode.
Faced with internal and external challenges, being acquired by Tongcheng Travel appears to be the optimal solution for Dida Inc to address its current predicament. It also provides an exit channel for early-stage investors like Nio Capital and William Li, who have been long-term backers. However, a rough estimate based on the offer price of HK$1.3875 per share suggests that Nio Capital and William Li would only recoup approximately HK$292 million and HK$28.01 million respectively from this transaction. This still represents a significant distance from their total investment cost of US$101 million (approximately HK$860 million), meaning the investment remains deeply underwater.
Pre-Deal Dividend and Strategic Motives
Notably, the board of Dida Inc has resolved to pay a special cash dividend to shareholders upon fulfillment of the acquisition conditions. The dividend is HK$1.1745 per share, amounting to a total of approximately HK$1.205 billion based on the total share capital of about 1.026 billion shares. This dividend will be paid from the company's own cash flow and will not utilize funds from Tongcheng Travel's offer.
However, as of the end of 2025, Dida Inc's current assets totaled only RMB 1.897 billion. Within this, cash and cash equivalents were merely RMB 967 million, with trading financial assets and other short-term investments totaling RMB 536 million. The total of highly liquid assets was RMB 1.503 billion. This special dividend of HK$1.205 billion is equivalent to approximately RMB 1.045 billion, accounting for about 55.1% of current assets and nearly 70% of highly liquid assets.
Does such a substantial dividend payout using internal funds raise questions about the company's intentions prior to a sale? In a year of poor performance and shrinking core business, paying a special dividend exceeding 55% of current assets will undoubtedly reduce the scale of Dida Inc's discretionary funds available for daily operations, technological upgrades, and marketing in the short term. What is the rationale and necessity for this? The five major shareholders stand to receive a 'farewell bonus' of HK$647 million from this special dividend. Is this at the expense of the company's future development capabilities?
The transaction still needs to clear pre-conditions such as Mainland anti-monopoly review and compliance verification by the Hong Kong Stock Exchange. However, once completed, Tongcheng Travel will gain absolute control, while Dida Inc maintains its listed status and minority shareholders retain their holdings. The predicament for minority shareholders, now part of a platform with half its liquid assets potentially 'drained' and under new ownership, is not difficult to foresee.
In terms of strategic synergy, Tongcheng Travel's intent behind acquiring Dida Inc is clear. From 2024 to 2025, the platform's monthly paying users grew by 4.4% and 5.6% year-on-year respectively, while annual paying user growth also remained in the low single digits, far from the early growth rates of 20%-30%. According to its previous annual reports, the WeChat mini-program is a significant traffic source for Tongcheng Travel, with about 80% of its monthly active users coming from it.
As the WeChat traffic dividend peaks, growth for the highly dependent Tongcheng Travel is inevitably slowing. In 2025, the company achieved total revenue of RMB 19.396 billion, a year-on-year increase of 11.9%, significantly lower than the 80.6% in 2023 and 45.8% in 2024. Although adjusted net profit grew 22.2% year-on-year to RMB 3.403 billion, this was primarily driven by cost-cutting and efficiency improvements, which is not a sustainable long-term strategy.
Tongcheng Travel's air ticket and hotel businesses involve low-frequency consumption, while Dida Inc's high-frequency ground transportation services could fill this gap. As of the end of 2025, the Dida Inc app had accumulated over 415 million registered users, with about 21 million certified private car owners on the platform, covering 366 cities.
However, the primary use case for ridesharing is commuting, which differs significantly from user behavior in travel scenarios. Although Dida Inc also offers smart taxi services, this segment's scale decreased by a cumulative 81.6% from 2023 to 2024, with its contribution to total revenue dropping from 4.2% to 0.8%. Its effectiveness in directing traffic to Tongcheng Travel remains to be seen. If Dida Inc fully transforms into a ride-hailing aggregation platform post-acquisition, it would not only face higher compliance and operational costs but also engage in direct, costly competition with internet giants like Gaode and Meituan, posing a significant cost pressure for Tongcheng Travel.
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