The deal, which could be announced as early as Monday, would combine Didi’s $28 billion valuation with Uber’s $7 billion market capitalization for its Chinese segment, Reuters reported. This competent plays the dominant role in ride-hailing services in the country. Didi will also make a $1 billion equity investment in Uber, making the two arch-rivals into business partners.
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Having racked up $1.3 billion from investors like DST Global and Soft-Bank, Ola has been in talks to raise fresh capital on the back of its increasing lead over Uber in terms of market share with the launch of Micro, its low-priced option, as well as Prime, and other options in the past six months.
In turn, Didi will invest in Uber at a valuation of nearly $70 billion.
After the completion of the long-expected transaction, Uber China will maintain independent branding and business operations to ensure stability and continuity of services for passengers and drivers, says the announcement.
The two companies had been fierce competitors in China. Uber’s investors are everyone, including China’s third powerhouse Baidu.
The firm, which is owned by Chinese internet titans Tencent and Alibaba, controls nearly 90 per cent of the market in China. Uber founder Travis Kalanick will join the Chinese company’s board while Didi Chuxing founder Cheng Wei joins the Uber board. Media reports said that the value of the newly combined company could reach $35 billion. Uber is profitable in the United States, Canada and about 100 other cities.
Didi had no immediate comment, and Uber declined to comment.
The purchase of Uber’s China business may complicate Didi’s alliance with other ride-hailing startups around the world.
Didi also boasts investments from the high-profile venture capital firm GGV Capital, which is known for investing in USA and Chinese businesses like Square.
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Didi Chuxing represents the merger of two Chinese Uber rivals, Didi and Kuaidi, who joined forces past year. By shedding its massive losses in China, Uber will help clear the path for an eventual initial public offering. “This is no small feat given that most USA technology companies struggle to crack the code there”.
