After China, Uber cedes Russian business to rival Yandex

By : |July 14, 2017 0

Nearly a year after ceding its Chinese business to local player Didi Chuxing, Uber is ceding yet another market to the incumbent, this time in Russia. After three difficult years in Russia, Uber has decided to merge with Yandex, the Russian search giant and operator of the ride-hailing service Yandex.Taxi.

The new company, yet-to-be-named, will be worth $3.725 billion and span 127 cities in 6 countries (Russia, Azerbaijan, Armenia, Belarus, Georgia and Kazakhstan). As per the deal which must receive regulatory approval, Tigran Khudaverdyan, the chief executive of Yandex.Taxi, will be the chief executive of the new venture. Uber will invest $225 million and take a 36.6 percent stake, while Moscow-based Yandex will invest $100 million and own 59.3 percent of the new enterprise.

“Together, we will continue to build a ride-sharing service that offers a viable alternative to automobile ownership or public transportation,” Khudaverdyan said in a blog post. The new, unnamed company “will have the right to use Yandex.Taxi and Uber brands in the region”, the companies said. Apps from both ride-hailing companies will continue to be offered, while the driver app will become a single platform. They will also operate the UberEATS food-delivery service.

The reasons behind Uber’s two mergers are almost same. The annual run rate of the rides Yandex.Taxi was doing as of June 2017 was more than double that of Uber’s despite US cab aggregator’s persistent attempts to undercut Yandex’s prices. Based on data provided by Yandex, Uber did less than 12 million rides in June 2017, while Yandex.Taxi did close to 24 million.

Last year the same thing happened in China where the company spent billions of dollars in rider subsidies to gain a foothold against Didi Chuxing, the local giant but failed. It eventually sold its China operations to Didi for a nearly 20 percent stake in the newly merged company that was then valued at $35 billion.

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