Uber Cedes Russia to Yandex With $3.7 Billion Merger

Uber Cedes Russia to Yandex With $3.7 Billion Merger
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Uber is handing over the keys to its business in Russia, as they are are merging their business with Yandex, according to Bloomberg.

Uber will invest $225 million and take a 36.6 percent stake in a new, yet-to-be named venture that will be valued at $3.73 billion, the companies said in a statement. The shares of Yandex, which will invest $100 million and own 59.3 percent of the new enterprise, jumped as much as 15 percent in Moscow to 1,881 rubles, its highest level ever.

The deal with Yandex is Uber’s second retreat from a major market. Last year, they left China in exchange for a 17.5 percent stake in rival Didi Chuxing, after losing more than $2 billion battling its competitor. While Uber remains the dominant ride-hailing operator in the U.S., it has been on the defensive, beset by scandals that led to Travis Kalanick’s ouster as CEO. The agreement with Yandex is part of Uber’s effort to improve revenue, narrow losses and resolve legal issues.

“This deal is a testament to our exceptional growth in the region and helps Uber continue to build a sustainable global business,“ Pierre-Dimitri Gore-Coty, Uber’s chief for Europe, Middle East and Africa, said in the statement. Tigran Khudaverdyan, head of Yandex.Taxi in Russia, will become CEO of the combined enterprise. Together, their businesses handle 35 million rides a month, and will also operate in Kazakhstan, Azerbaijan, Armenia, Belarus and Georgia. The deal is expected to close in the last three months of 2017.

Uber’s exit from Russia could be a precursor to more deals in other big, fiercely competitive ride-hailing markets. Investors have raised questions as recently as this month about Uber’s continued losses in India and Southeast Asia, asking privately whether the company would be better served by cutting deals with market leaders Ola and Grab, two people familiar with the matter said.

In Russia, Yandex.Taxi has gross bookings of $1.01 billion on an annualized basis, while Uber had $566 million, according to a presentation prepared for investors. 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.