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Asia Today ISSN 1861-4604 Monday, June 18, 2018

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Embroiled in a deep subsidy war in Russia, Uber decides to merge with top competitor

Presence in Russia

Share on Facebook July 14, 2017, Reporter : Big News Network, Reader : 538

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MOSCOW, Russia - Uber, that has spent millions to build a presence in Russia and other countries in the region has suffered constant defeat, has now decided to merge its Russian business with local competitor Yandex.

Yandex, that is a company operated by a search firm, often referred to as the “Google of Russia” will reportedly own about 59.3 percent of the yet-to-be-named combined company, valued at $3.7 billion.

Uber, which will invest $225 million, will have a roughly 37 percent stake in the combined firm and employees will own about four percent, reports stated.

On Thursday, after the deal was announced, Yandex's stock climbed 16 percent.

Reports also stated that Tigran Khudaverdyan, who heads Yandex.Taxi and will head the new company.

Khudaverdyan has stated that the combination will boost rides for drivers and reduce wait times for passengers.

He said in a statement, "This combination greatly enhances Yandex's ability to offer better quality service to our riders and drivers, to quickly expand our services to new regions, and to build a sustainable business.”

According to data released to investors on Thursday, Yandex, which is twice the size of Uber, was started in 1997 and has a search engine and other services.

It launched its taxi business in 2011 and as part of the deal, Yandex will contribute $100 million to the new company.

The new company will operate in 127 cities in Russia, Azerbaijan, Armenia, Belarus, Georgia and Kazakhstan.

Uber has sought to cast the deal as a way to make its finances sustainable and build on its growth.

The San Francisco-based ride-sharing company has been under pressure from investors to stem losses.

It is also trying to move past a string of scandals that led to the ouster of its long-time chief executive Travis Kalanick.

Addressing employees in an email posted on the firm's website, Pierre-Dimitri Gore-Coty, head of Uber's business in Europe, the Middle East and Africa said, "This is an exciting opportunity in a unique situation and our operations in other countries will not be affected.”

 

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