China's top two taxi app services, Didi Dache and Kuaidi Dache, announced they've agreed to merge and become the biggest taxi hailing company in the country.

According to Xinhua, the merger between Didi Dache and Kuaidi Dache into a powerful entity is valued at US$6 billion.

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Reports say both companies will continue to operate independently. Wei Cheng, Didi's chief executive, and Dexter Chuanwei Lu, Kuaidi's chief executive, will act as the new company's co-chief executives.

Putting their bitter rivalry behind them, the two firms currently dominate the Chinese taxi app market. Both apps are used by 95 percent of Chinese app users, which is about 150 million customers.

Major Chinese tech companies such as e-commerce giant Alibaba Group Holding Ltd and internet giant Tencent Holdings Ltd invested in the two companies in the past.

"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," said Alibaba Group.

Kuaidi Dache had secured a US$600 million funding round last December from Japanese telecom and internet company SoftBank Corporation and New York-based Investment firm Tiger Global Management LLC.

Didi Dache, on the other hand, secured US$700 million from Tencent and Russian private equity fund DST.

The move marks a step towards intense competition against Chinese search engine giant Baidu, Inc. which made an investment in U.S.-based transportation firm Uber in December 2014. Baidu said its investment will help bring Uber to China.

Didi and Kuaidi said they will announce more details at a press conference to be held after the Chinese New Year next week.

TagsDidi Dache, Kuaidi Dache, taxi app, Alibaba Group, SoftBank, Tiger Global, DST