Sci-tech

Uber borgs with Yandex's ride-sharing biz in Russosphere

Uber borgs with Yandex's ride-sharing biz in Russosphere”

In a joint statement, Yandex and Uber said they would join forces in Russia, Armenia, Azerbaijan, Belarus, Georgia and Kazakhstan to create a new company operating in 127 cities, in a deal expected to close in the fourth quarter.

As part of the deal, Yandex will invest $100 million and hold a majority stake of 59.3 percent, while Uber will invest $225 million and hold a stake of 36.6 percent. Employees will own 4.1 percent of the company on a fully diluted basis.

Together, Yandex and Uber will account for roughly 35 million trips per month with a monthly revenue of 7,9 billion roubles ($131 million) in all six countries. In 2016, Uber sold its China operations to Didi Chuxing for a almost 20 percent stake in the newly merged company that was then valued at $35 billion.

Yandex already operates a ridesharing service in Moscow and several other Russian cities, but this service will now merge with Uber's services under the new company.

As Uber continues to work through a huge amount of internal management turmoil, the company is also consolidating and rationalising more of its worldwide business. "It allowed us to gain loyalty of tens of millions of consumers, and we are happy to continue our work with Uber". In Russia, Yandex.Taxi beat Uber by an nearly 2-to-1 factor when it comes to gross bookings.

More than 35 million rides were performed in June between the two operations, collecting more than $130m in gross bookings.

The new company will also operate the UberEATS service in the region.

The combined company will be controlled by Yandex and be valued at $3.725 billion.

That means Yandex.Taxi users will be able to hail an Uber in places like India and the USA using the Yandex app. Uber users will also be able to hail a Yandex.Taxi using the Uber app in places Yandex is available. But it offers one vision for how companies like Uber can escape the vicious cycle of competing to subsidize rides in a money-losing race to the bottom.

With the Yandex deal, Uber will also be appointing three board members for this new company. But neither company could afford the high level of subsidies (and resulting costs from driver corruption) needed to win new drivers and riders and new markets. The driver apps, however, will be combined.



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