After selling its Chinese business in August last year, Uber has now yielded its clout abroad again — this time to merge its Russian business with the taxi arm of Russian search engine giant Yandex. The new company will be worth $3.725 billion, both companies have announced, and span 127 cities in 6 countries (Russia, Azerbaijan, Armenia, Belarus, Georgia and Kazakhstan).
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. The remaining shares are held by company employees. Full-time Uber employees in the countries involved will join the new company. A name for the new company has not yet been announced.
Uber launched in Moscow in 2014. It has a presence spanning 16 cities in Russia, and five in Azerbaijan, Belarus, and Kazakhstan. Yandex has gross bookings of $1.01 billion on an annualized basis, while Uber had just over half of that, at $566 million, according to Bloomberg. Yandex, often called the "Google of Russia" is a well established brand and has an extensive mapping database which puts it at an advantage over Uber, reports the New York Times. So rather than fighting over market share, a merger made sense.
"Combining our business with Yandex will give us a very significant stake in a new company which will initially serve more than 35 million trips each month," Pierre-Dimitri Gore-Coty, head of Uber’s business in Europe, the Middle East and Africa wrote in an email to employees today.
Yandex estimates the combined company’s share of the taxi sector in Russia is only between about 5 to 6 percent. "Many of us who work inside Yandex feel that everyone has already switched to ride-sharing, but in reality, we are just at the beginning of this journey," wrote Tigran Khudaverdyan, CEO of Yandex.Taxi in a blog post.
Uber says that for the foreseeable future, both the Uber and Yandex rider apps will continue to operate as normal. Driver apps will be integrated after the transaction closes. The deal is still subject to regulatory approval and other conditions, and is expected to close in the last quarter of the year.
Correction: An earlier version referred to the name of the new company as NewCo. This has since been corrected, the new company name has not been announced.