Huge news for China’s ride-sharing industry, it appears that Didi Chuxing will gobble up rival Uber China in a merger deal that will value the combined entity in China at $35 billion.
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The fierce battle in China between ride-hailing leaders Uber and Didi has ended.
Uber has lost more than US$2 billion in the country, people familiar with the matter said. Didi recently made headlines around the world after receiving a $1 billion dollar investment from Apple, followed by $7 billion in a subsequent round of fundraising.
The share-swap deal will in turn make Uber the biggest shareholder in Didi Chuxing.
Didi CEO Cheng Wei said the two companies “have learned a great deal from each other over the past two years in China’s burgeoning new economy”.
Didi Chuxing confirmed on Monday that it will merge with Uber China’s business, putting an end to the two companies’ cash-burning fight over the dominance of China’s ride-hailing market. “Getting to profitability is the only way to build a sustainable business that can best serve Chinese riders, drivers and cities over the long term”, he said.
Post the merger of its Chinese business, Uber is expected to focus more aggressively on the Indian market, its third biggest market after the U.S. and China, at present. “If it is true, the allowance offered by Didi or Uber now will certainly decrease”.
He said Uber was operating in more than 60 cities in China and “doing more than 150 million trips a month”.
The rules also say that local authorities have the right to impose a “government guidance price” whenever deemed necessary, although the companies can adjust their prices according to the market.
Didi had agreed to work with the US’s Lyft Inc, India’s Ola and Southeast Asia’s Grab to create a global force to take on Uber.
A deal between the two – which have been spending heavily to gain market share and battling fiercely for passengers – could be announced as early as Monday, said the source, who declined to be identified because the deal is not yet public. Apple could be looking to sell cars to ride sharing companies, provide some sort of service to the market, or collect data it finds valuable for its own vehicle designs.
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By “shedding its massive losses” in the country Uber will help clear its way to a future flotation, Bloomberg said.
