Uber Changes Lanes with Yandex.Taxi Merger

Representation pic

Uber will own just under 40 percent of the new business.

Uber is ceding control of the Russian market by agreeing to merge its ridesharing business in the country and five other ex-Soviet republics with Yandex, the Russian search-engine leader that also runs a popular taxi-booking app. Together, their businesses handle 35 million rides a month, and will also operate in Kazakhstan, Azerbaijan, Armenia, Belarus and Georgia. They will also operate the UberEATS food-delivery service.

Yandex will hold a majority 59% stake in the new company, Uber will own 36.6% and employees will hold the rest.

Uber Communications Director in Russian Federation and the CIS Irina Gushchina said earlier that Yandex.Taxi and Uber planned to file to a request with the Federal Antimonopoly Service (FAS) on the companies' business merger in the coming days.

The whirlwind of scandals eventually led to Uber founder Travis Kalanick's resignation last month.

Uber said the merger did not imply a strategy of further retrenchment elsewhere.

The JV is "a strategic positive" for Y.Taxi, Yandex's ride-sharing company, by preventing a costly market share battle, the analysts write. But that figure is down from the last three months of 2016, when Uber said it lost almost $1 billion. "Combining Yandex's local expertise in search, maps and navigation with our leading global experience in ridesharing will enable us to build the best local services and provide a credible alternative to auto ownership across the region".

"This deal is a testament to our exceptional growth in the region and helps Uber continue to build a sustainable global business", said Gore-Coty.

The taxi business is separate from Yandex's other ventures, including Internet search, and an initial public offering of the joint venture is a possibility in the future, Yandex chief financial officer Greg Abovsky said on a conference call. That kind of deal making could allow the company to direct its resources toward costly and ambitious goals, such as building an autonomous fleet of on demand cars, rather than subsidizing price cuts against a stronger competitor, he said. In the first quarter of this year, Uber reported more than $700 million in losses.

As part as the deal, Yandex signed a roaming agreement with Uber so users of its taxi app can hail Uber rides when travelling overseas, Yandex executives said.

The deal with Yandex could be a sign of things to come for Uber, as ride-hailing markets around the world continue to be very fiercely competitive.

Uber's plans of global domination now lie in disarray.



Other news