Chinese on-demand mobility (ODM) firm Didi announced Monday it will take over Uber’s China business, in a deal that could value the merged China operation at 35 billion US dollars.
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Didi said in a statement that Uber had agreed to take a 5.9 percent stake in the new entity.
“Uber and Didi Chuxing are investing billions of dollars in China and both companies have yet to turn a profit there”, Travis Kalanick, chief executive officer of Uber, wrote in a blog post obtained by China Daily today.
Last year, China’s ride-hailing leaders Didi and Kuaidi merged.
Apart from this Uber is also selling their China subsidiary, which is the complex deal involves Didi making a $1 Billion investment in Uber Inc.
Even more spectacular for Uber is that Didi will make a $1 billion investment in the USA firm.
“This agreement with Uber will set the mobile transportation industry on a healthier, more sustainable path of growth at a higher level”, Cheng said in a statement.
Didi’s valuation after the deal will be $35 billion, reports said.
The fierce rivalry had led both companies to heavily subsidise their journeys.
Uber and Didi Chuxing were reached for comment but did not immediately respond.
Uber, headquartered in San Francisco, operates in more than 60 Chinese cities and plans to increase to more than 100 by the end of 2016. In the deal Uber will hold a 20 per cent stake, Xinhua news agency reported. Under the deal, Didi will also invest $1 billion in Uber, which operates globally.
His at times elegiac farewell praised the company’s China team as “the smartest and most entrepreneurial sons and daughters of China” who were “nobly serving” China’s cities. China’s new industry regulations, which will go into effect in November, forbid the running of ride-hailing services below cost.
Both Uber and Didi have welcomed the decision, having previously operated in a legal grey area in the country.
The deal will end the most watched rivalry in the global cab-hailing sector in a market that has traditionally been unfriendly to outsiders, particularly United States tech companies.
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After the merger, Didi will count all three of China’s biggest technology companies as shareholders – online shopping Alibaba Group Holding Ltd., gaming-to-social leader Tencent Holdings Ltd. and Baidu.
