Uber China will keep its name, but the company will merge into the much larger Didi Chuxing once this deal goes through.
Advertisement
Monday’s announcement marked a surrender by another foreign technology brand to intense competition in China.
Uber Technologies will soon sell its business in China to Didi Chuxing, the leading taxi service in the country.
This is the latest in a string of moves by foreign companies to separate their China business units. Yum!
The merged company, Didi Chuxing, brought together backers Alibaba Group Holding Ltd (阿里巴巴) and Tencent Holdings Ltd (騰訊), the nation’s most valuable Internet businesses. According to reports, Uber will get 5.89 percent of the combined company with preferred equity interest equal to 17.7 percent of the economic benefits. Didi founder Cheng Wei and Uber Chief Executive Officer Travis Kalanick will join each other’s boards.
No financial details were released.
The new, combined company is expected to be worth $35 billion, and Uber China will still own roughly 20 percent of the operations.
He added that the deal would “set the mobile transportation industry on a healthier, more sustainable path of growth at a higher level”. In February, Kalanick said that Uber was losing $1 billion a year in China.
Uber has struggled to compete, and even though it is taking 150m travellers a month, it has racked up hundreds of millions in losses as it tries to break in to the market.
The reports come days after the Chinese authorities announced new rules governing ridesharing, making clear for the first time that they may now operate legally in the country.
Advertisement
“Over 15 million drivers and 300 million registered users have joined Didi’s open, sharing-based ecosystem that connects people, cars and lifestyles”, Didi Chuxing President Jean Liu said in a statement. However, the regulations forbid these companies from operating at below cost, which means that the ride-hailing competitors can not engage in subsidy battles like those between Didi and Uber past year. Both publishers cited a source familiar with the matter. Apple also recently made an investment in Didi and General Motors made one in Lyft.
