China’s two market-dominating taxi-hailing apps, Didi Dache and Kuaidi Dache, confirmed last week’s rumors when they officially announced a merger on Saturday. The merger will create the largest taxi-hailing mobile app service in the world.

A report by Xinhua, China’s state-run news service, said that the companies will retain their own brands and operate as separate entities after the merger. Analysts estimate the new entity to be valued at $6 billion as combined they control more than 95 percent of China’s taxi-hailing app market. According to research consultancy, Analysis International Kuaidi holds 56.5 percent of the market while Didi accounts for a share of about 43.3 percent.

The two companies have been in fierce competition to dominate the world’s largest transport market with an estimated 150 million Chinese consumers using smartphone apps to hail taxis.

The past year has seen both companies run intensive campaigns worth hundreds of millions of dollars to attract taxi drivers and consumers to it services.

Although not short of cash, the move is likely in recognition of the fact that neither company is winning the war and an effort to rather combine forces to stem the price war and ward off any attacks by competitors looking to capitalize on the large market opportunity.

Uber Inc. is expanding its presence in the Chinese taxi market with the backing of Baidu Inc., the Beijing-based search engine and rival to Alibaba Holding Ltd and Tencent Holdings Ltd. In December, Baidu announced a $600 million investment to help expand Uber in China.

Kuaidi is backed by Alibaba while Didi is backed by Tencent. In the last few months, the companies have secured combined funding in excess of $1 billion. Didi scored $700 million in a December funding round and Kuaidi landed $600 million in January.

“As a shareholder in Kuaidi Dache, Alibaba Group is supportive of this merger as it will promote the healthy development of the taxi-app and expand city travel options for users,” Alibaba said in a statement.

The new entity will be formally launched after the Lunar New Year, which starts on February 19 and will see Didi chief executive Wei Cheng and Kuaidi chief executive Dexter Chuanwei Lu jointly head up the yet to be named new business.

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