Ride-sharing app Uber has struck an agreement to merge its Chinese business with rival Didi Chuxing in a 35 billion United States dollar (£26 billion) deal.
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Uber China will, however, acquire a 20 percent stake in Didi Chuxing, and the Chinese company will invest $1 billion in Uber.
In exchange for its China business, Uber will receive a stake of nearly 18 percent in Didi and become its largest shareholder.
Didi Chuxing is the product of a merger between two homegrown ride-hailing companies: Didi Dache and Kuaidi Dache, which joined forces in 2015 in a move to counter Uber.
“Uber entered this uncharted territory in February 2014, two years after Didi was founded”, Kalanick said in the post.
“This agreement with Uber will set the mobile transportation industry on a healthier, more sustainable path of growth at a higher level”, Wei said.
Bloomberg News, which first reported the merger, said that “Uber’s investors had been clamoring for the company to sell off its China assets and focus on more promising opportunities”.
Uber has struggled to compete, and even though it is taking 150 million travellers a month, it has racked up hundreds of millions of loses as it tries to break into the market. The regulations, which comes into effect from November 2016, allow ride-hailing companies to operate in China as long as they continue to apply and receive licenses for their companies and drivers.
This ends a bitter battle between the two rival tech companies in China. In 2005, Yahoo! Inc. made a similar deal, selling its businesses in China to Alibaba Group Holding Ltd., along with a $1 billion investment – one of the internet company’s best bets. On the other hand, Didi will also agree to invest about $1 billion in Uber Technologies at a valuation of $68 billion, implying a stake of around 1.5%.
Outside China Uber has other battles on its hands with companies such as Lyft and Ola, both of which Didi also holds investments in.
Uber is teaming up with its biggest rival in China.
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Despite successes nearly everywhere it has set foot, the global taxi company Uber has given up its operations in China for a minority stake in the country’s taxi company; Didy Chixing technology co.
