Fuel price rise spurs Shanghai taxi merger-sources

SHANGHAI, June 25 (Reuters) - Shanghai's top taxi operator Dazhong Transporation (Group) Co (600611.SS) is in talks to acquire the taxi unit of local rival Haibo (600708.SS) as the industry grapples with rising domestic fuel prices, industry and government sources familiar with the situation said on Wednesday.

Dazhong, partly owned by investment bank Credit Suisse (CSGN.VX), had been in preliminary talks with Haibo for a full purchase of its taxi unit and the negotiations have progressed further since Beijing announced a surprise rise in fuel prices last week, said the sources.

The sources declined to be identified because they were not authorised to speak to the media on the matter.

Senior officials of the Shanghai city government held a closed-door meeting this week to discuss plans to help local taxi companies, mostly state-controlled enterprises, to overcome operational difficulties due to fuel price hikes, the sources said.

In addition to providing temporary government subsidies, senior Shanghai officials are also encouraging mergers by local taxi firms to face the challenges to the industry from rising fuel prices, said the sources.

"It's the same as the idea behind consolidation in the airline industry, but it will certainly be much easier for taxi firms to merge," said one of the sources. Dazhong currently operates about 9,000 taxis in Shanghai, China's financial hub, while Haibo has roughly 5,000. (Reporting by Fang Yan and George Chen; Editing by Edmund Klamann)