Didi will buy Uber China in a deal that values the combined company at 35 billion US dollars, in which Uber China will hold a 20 percent stake, according to Bloomberg on Monday, citing sources familiar with the matter.
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“Three years ago, I traveled to China with a small group of people to see if we might be able to launch Uber there”, said Travis Kalanick, Uber’s CEO, in a blog post, adding, “Most of the people we asked for advice thought we were naïve, insane – or both”.
Global ride-hailing giant Uber Technologies Inc. has given up its costly battle for China’s riders, swapping its local operations there for a minority stake in the country’s homegrown champion, Didi Chuxing Technology Co.
“Didi Chuxing and Uber have learned a great deal from each other over the past two years”, said Mr Cheng, who is also CEO, in the statement.
Both the companies were unable to churn a profit despite investing billions into their operations in China.
Bloomberg has reported that the Chinese service will buy Uber for $35 billion (£26 billion), acquiring its brand, business and data.
As part of the agreement, Cheng will join the board of Uber, while Uber chief executive Travis Kalanick will join Didi’s board.
Last February, Didi Dache and Kuaidi Dache, the precursors of the Didi Chuxing, jointly announced their strategic merger, becoming one of the largest vendors in the market. Uber gets a 20 percent stake in that – Didi’s previous valuation was $28 billion.
Didi Chuxing, which already had investments from key players such as Alibaba, SoftBank and Tencent, raised $7.3 billion in a financing round in June that included Apple investing in the company.
In agreeing to sell all its operations in China to Didi Chuxing, Uber has done something unusual: concede to a rival.
The announcement of the deal comes four days afterthe Chinese government announced new ride-hailing regulations at a national level. Claiming almost 90 percent of China’s market, Didi joined forces with Kuaidi previous year as the competition with Uber intensified and secured support from Internet companies such as Alibaba Group Holding Ltd. and Tencent Holdings Ltd.
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Uber has sunk more than $2 billion in China to little effect, and neither it nor Didi have seen profits from their investments in the country. Uber China had only 200 employees compared with 4,000 with Didi Chuxing. “This is no small feat given that most United States technology companies struggle to crack the code there”.
