It is expected that Uber will run its app in China under Didi Chuxing for a brief period.
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Ride-sharing giant Uber is merging its China operations with local rival Didi Chuxing, reports say, ending a ferocious battle for market share in the world’s second-largest economy.
Monday’s announcement marked a surrender by another foreign technology brand to intense competition in China.
Uber launched in China in 2014.
During June-July the companies have started discussions about a deal, so now this agreement between Uber and Didi may influent on Lyft, Uber’s main rival in the US. Yahoo, eBay and others have turned over Internet operations to Chinese partners or withdrawn. As part of the deal, investors in Uber China, an entity owned by San Francisco-based Uber and Baidu among others, will receive a 20% stake in the combined company. Uber CEO Travis Kalanick (whose previously leaked blog post is now official too) will also join the Didi board.
No financial details were released. The deal will take the overall value of Didi Chuxing’s business to around $35 billion.
Uber was believed to have been operating in China with heavy losses. Although Uber was profitable in developed markets in the first half of 2015 and Uber has lost more than $2 billion in China. Kalanick, meanwhile, will join Didi’s board.
“It’s a win-win for both companies”, said one source.
McDonald’s is also reportedly looking to sell its Chinese operations. The deal comes close on the heels of Chinese government legalizing taxi-hailing services which are something that will give a huge leeway for Didi and Uber to expand its services in the country. The company is already operating in over 60 cities in the country and plans to roll out its services in another 30 cities in the next few months.
Update, 7:43 p.m. AEST: Added Weibo confirmation from Didi Chuxing.
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Didi itself is a merger from two powerhouse ride apps, Didi Dache and Kuaidi Dache, and has a killer 87 percent market share of private cars, and 99 percent of taxis.
