The purchase of Uber’s China business may complicate Didi’s alliance with other ride-hailing companies.
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Kalanick will become a board member of Didi, while Didi’s founder Cheing Wei will join Uber’s board.
The reports come days after Chinese authorities announced new rules governing ridesharing, making clear for the first time that they may operate legally in the country. Didi could not be reached for comment and Uber declined comment. After two years and billions of dollars, the firm has admitted defeat in China and agreed to sell all its Chinese assets and infrastructure to its monolithic rival Didi Chuxing. Mr. Kalanick said his company had been losing $1 billion in China each year. Recode reports that it has “confirmed the transaction” but does not have any official statements from either Uber or Didi.
The deal comes after China last week issued guidelines that establish a long-awaited framework for the booming ride-hailing industry and remove uncertainty for firms such as Didi and Uber.
The company rolled out a service in April which allows users from China to easily hail and pay for rides across India, Southeast Asia and the U.S. from a single app. This is about a $7 billion share of Didi Chuxing’s estimated $35 billion value after the merger.
Finally, a combination of Uber’s Chinese operations with Didi Chuxing just “makes complete sense” as the rivalry between the companies was “terrific” for riders and drivers, not so much for the companies investors. The Chinese company offered special deals to both drivers and passengers while taking investments from Apple and other tech giants.
Kalanik wrote today, “I have no doubt that Uber China and Didi Chuxing will be stronger together”.
While Uber will walk away from operations in China, it is taking a significant stake in the largest player there.
Kalenick said neither company had yet made a profit in China.
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Like other foreign companies, Uber had to face stringent regulations to operate in China.
