The famous and worldwide ride-hailing service Uber Technologies Inc. will sell their operations and China business to the rival company Didi Chuxing.
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Once finalized, Uber China’s investors will own a 20 percent stake in the merged company, which is expected to be worth approximately $35-billion due to the combined valuation of Uber China and Didi Chuxing.
Ending the long-dragged battle in Chinese ride-hailing market that has cost both the companies billions, Uber has finally thrown in the towel.
China has been a challenging market for Uber, which has been burning through more than US$1 billion a year in a price war with Didi. In February, Kalanick said that Uber was losing $1 billion a year in China. “Sustainably serving China’s cities, and the riders and drivers who live in them, is only possible with profitability”.
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 Chinese government passed a new rule last week that legalized ride-hailing services, paving the way for further expansion of these businesses.
Kalanick noted that neither Uber nor Didi Chuxing have turned a profit yet.
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Didi Chuxing and Uber reached an agreement in which Didi Chuxing will acquire all of Uber’s China-related assets, including the brand, business operations and data. “This is no small feat given that most U.S. technology companies struggle to crack the code there”. Didi is an investor in Lyft, and the two companies have linked their apps so that Didi’s Chinese passengers can summon a Lyft vehicle while travelling in the US. However, we’d be surprised if drivers for Uber China didn’t work on the same ride-hailing network as their peers at Didi Chuxing. Last year, Didi and Kuaidi joined hands to form a single company, bringing large investors including Alibaba and Tencent on the same page.
