Since launching in Moscow three years ago, Uber has had a tough time displacing its local counterpart in Russia. Yesterday the world’s biggest ride-share startup gave up on the quest and inked a deal with Yandex.Taxi. The newly formed venture is valued at $3.7 billion and is owned 59.3% by Yandex and 36.6% by Uber, with the remaining 4.1% held by employees.
According to the news, Moscow-based tech giant Yandex and San Francisco-based Uber will form a new ride-hailing company to cover Russia, Armenia, Azerbaijan, Belarus, Georgia, and Kazakhstan. The deal will also roll in UberEats, and $2225 million in cash investments from Uber. Since entering the Russia market, Uber has had an uphill battle. As of June Yandex.Taxi was doing more than double the business of Uber even despite the US company’s constant price undercuttingg of Yandex. Pierre-Dimitri Gore-Coty, head of Uber’s business in Europe, the Middle East and Africa, had this to say via Uber’s blog post.
“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 and operate in an incredible 127 cities in six countries across the region.”
For Yandex.Taxi, which is investing $100 million in the new company, the deal eliminates all series competition and gives the company access to two new revenue streams: UberEats and any additional revenue from a roaming agreement it struck with Uber as part of the deal. CEO of Yandex.Taxi and the new merged company Tigran Khudaverdyan had this to say in a shareholder call:
“This is the largest ride-sharing roaming agreement in the world.”
This most recent merger marks the 2nd time Uber has moved over for a major market competitor. The sale to Didi Chuxing in the Middle Kingdom that cost Uber a reported $1 billion a year. Uber and Yandex project an annual run rate of 419 million rides and $1.6 billion in gross bookings.