Ride-hailing firm Didi Chuxing will acquire US-based Uber Technologies’ operations in China, marking an end to the fierce battle between the two companies for leadership in the Asian country.
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Investors in Uber China, including the nation’s search engine giant Baidu, would together receive 20% of the shares in the new entity, according to Bloomberg on Monday. Didi founder Cheng Wei and Uber chief executive officer Travis Kalanick will join each other’s boards.
Tesla isn’t the only company with an urge to merge today: ride-sharing powerhouse Uber plans to merge its operations in China with the market-dominating Didi Chuxing.
“Uber and Didi Chuxing are investing billions of dollars in China and both companies have yet to turn a profit there”, Kalanick says.
The valuation of the combined ride-hailing company is $35 billion, the people said.
In the past, Uber and Didi have spent billions attracting riders and drivers to gain greater market share.
Uber usually earns high profits from most of its market but has lost $2 Billion in the case of China.
Didi Chuxing represents the merger of two Chinese Uber rivals, Didi and Kuaidi, who joined forces a year ago. Didi Chuxing operates in 400 cities and completed 11 million rides a day in the first quarter of 2016.
John Zimmer, Lyft’s president and co-founder, said the consortium, which also included Grab Taxi in Southeast Asia and Ola in India, would provide “the world’s best coverage while building upon our shared vision of reconnecting communities through better transportation”. Apple Inc joined in this year with a US$1 billion investment in Didi. “We were a young American business entering a country where most U.S. internet companies had failed to crack the code, and with a product that needed rebuilding”.
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A longtime technology consultant in China, Duncan Clark, stated recently that the cost of subsidies for Uber were unsustainable and “they couldn’t have gone public with that black hole”, reports the Wall Street Journal.
