Mobike Reportedly Buying Smaller Bike-Sharing Rival

China’s young bike-sharing industry is undergoing a big spin, as one of its top players, Mobike, reportedly is swooping in to buy a smaller rival — the first acquisition in the hotly competitive sector.

Beijing Mobike Technology Co. will complete acquiring Xiamen-based UniBike in the near future, portal Tencent reported, citing an unnamed source. The amount of the deal was not disclosed.

In a written statement to Caixin, MoBike said the report was “not accurate,” but did not elaborate.

Mobike, one of the top two giants in the industry, started in Shanghai in April 2016. It now operates in 100 cities in China, Singapore and the U.K. It will roll out bikes in Japan later this year.

The bike-sharing model has attracted many startups doing the same business: allowing users, after paying a deposit, to unlock a bike via a smartphone app and park the two-wheeler essentially anywhere on a sidewalk or public space.

UniBike was the first company to cancel the deposit and ask only for up to 0.5 yuan 7.3 U.S. cents) for a half-hour ride. Last year, Mobike twice invested in UniBike and now holds 30% of its shares, according to the records on the National Enterprise Credit Information Publicity System.

UniBike will in the future target lower-end users through the deposit-free model, while Mobike will try biting into the high-end market, the source told Tencent.

The industry is experiencing a shakeup now. A week ago, startup Wukong Bike became the first bike-sharing firm to go bust.

For now, shared-bike operators have to win users by burning through money and offering discounts. The price war has parallels to the ride-hailing industry, which saw fierce initial competition but is now dominated by Didi Chuxing, which swallowed its rivals Kuaidi and Uber China.

Similarly, the bike-sharing industry will eventually head toward a monopoly, predicted Wu Dong, a professor at the School of Management at Zhejiang University who studies innovation, startups and business strategy.

Contact reporter Coco Feng (renkefeng@caixin.com)