Uber bows to Didi's might, to sell its China operation in Rs 2.3 lakh cr deal: report
Global ride-hailing giant Uber Technologies Inc. is merging with dominant local rival Didi Chuxing, thus ending a costly battle between the two companies, which competed for customers and drivers.
The valuation of the combined business will be $35 billion, according to a report from business news portal Bloomberg, which cited a leaked blog post draft and anonymous sources.
Both companies have spent billions of dollars on subsidies for drivers and passengers, as well as trading vitriolic accusations, as they fought for dominance in the potentially lucrative market.
As part of the deal, investors in Uber China, which is a separate business unit owned by Uber, will get a 20% stake in the combined company, and Didi will make a $1 billion investment in Uber’s main business at a $68 billion valuation, the report said.
Last year, China’s ride-hailing leaders Didi and Kuaidi joined forces, creating a homegrown juggernaut. The merged company Didi Chuxing brought together backers Alibaba Group Holding Ltd. and Tencent Holdings Ltd., the country’s most valuable internet businesses. Didi, which claims almost 90 percent of the China ride-hailing market, said last month that it had recently raised $7.3 billion - $1 billion of which came from Apple - in one of the world's largest private equity financing rounds.
A blog post circulating on Chinese social media purportedly written by Uber CEO Travis Kalanick said: "I've learned that being successful is about listening to your head as well as following your heart."
Both firms were "investing billions of dollars in China and both companies have yet to turn a profit there", he added.
"Getting to profitability is the only way to build a sustainable business that can best serve Chinese riders, drivers and cities over the long term."