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Photo credit: Mark Warner.
The news:
- In a case of history repeating itself a little too soon, Uber is pulling out of the ride-hailing arena in Russia, merging its business there with local rival Yandex.
- Yandex will hold a majority stake of 59.3 percent in the company born of the merger, while Uber will invest US$225 million for a 36.6 percent stake. The still unnamed new company’s value is US$3.73 billion, according to the former rivals.
- The deal is expected to be completed in the last quarter of 2017.
Why it matters:
- This is the second market Uber concedes to a rival outside its native US. Its Chinese unit was acquired by local incumbent Didi Chuxing in a US$35 billion deal.
- The US company faces fierce opposition at home and abroad, like Grab in Southeast Asia, Ola in India, and Lyft on its native soil. It’s also posted a US$708 million loss for Q1 2017 and has lost key personnel including CEO Travis Kalanick in a series of controversies.
- In this climate, investors are reportedly making the case for the company to follow a similar path in other markets and strike deals with competitors there.
Source: Bloomberg.
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