A year after selling its business in China to its rival Didi Chuxing in exchange for a 17.5% stake, Uber on Thursday announced its merger with the taxi arm of Russia’s Yandex. San Francisco based Uber and Russia’s search engine giant Yandex have agreed to form a new company which will be worth $3.7 billion and will initially operate in 127 cities across Russia, Belarus, Azerbaijan, Kazakhstan, Armenia and Georgia.
Yandex, often known as the Google of Russia, will be investing $100 million as a part of the deal and will hold a majority stake of 59.3% in the new company, while Uber will invest $225 million and will hold a 36.6% stake. The rest of 4.1% will be held by the employees.
Things have not been looking good for Uber in the past few months. With accusations of a sexist culture, legal setbacks and driver protests which led to ouster of Travis Kalanick, co-founder and CEO Uber Technologies, this move to merge with Yandex is seen as a climbdown for Uber otherwise known for its aggressive approach in expanding in global market.
Pierre-Dimitri Gore-Coty, head of Uber’s business in Europe, the Middle East and Africa wrote an email to employees on Thursday that read “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.”
The new company which has not yet been named will be headed by Tigran Khudaverdyan, chief executive of Yandex.Taxi. Khudaverdyan said in a statement that the aim was to “create a platform that will be comparable in terms of comfort and accessibility with having your own car.”
The companies stated that the end user experience of both Yandex and Uber will not be impacted, however the driver apps will be integrated after the transaction is closed.
The deal between Yandex and Uber is said to be closed by the end of this year.