Daimler will attempt to stall the meteoric rise of Uber by creating Europe's biggest e-hailing taxi company.
The firm said its MyTaxi firm will join forces with the smartphone app Hailo to create a new company with 70 million passengers.
Led by Hailo chief executive Andrew Pinnington, the business will take the MyTaxi brand and will be based in Hamburg, Germany.
It said the undisclosed deal will create a combined business commanding 100,000 registered taxi drivers in 50 cities across nine countries.
Klaus Entenmann, chairman of Daimler Financial Services, said the tie-up was a strategic step towards becoming a leader in its field.
He added: "This investment is in addition to the nearly 500 million euros (£419 million) we've already invested in building mobility platforms and services over the last years.
"We are prepared to make further strategic investments as we continuously build our mobility eco-system."
The new company will bring together Hailo's operations in the UK, Ireland and Spain, with MyTaxi's business across Germany, Italy, Poland, Portugal, Spain and Sweden, if it wins the backing of regulators.
It comes after Uber's push into Europe hit a bump in the road earlier this month when it was forced to suspend its operations in Hungary indefinitely from July 24 after new rules regulating passenger transport were enforced.
The laws were changed after pressure from taxi companies and drivers, who held numerous protests slowing traffic in Budapest.
ends
MyTaxi relies on existing taxi firms in order to make money, unlike Uber's business model, which was set up to compete with established taxi companies.
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