Yandex and Uber combine forces in Russian Federation
- Author: Regina Walsh Jul 14, 2017,
Jul 14, 2017, 0:15
Unlike that deal, however, Uber will remain an active participant in its new investment and its Russian users will continue to use the same app as the rest of the world.
"Partnership with Uber will help us broaden the quality of our service and the geographic scope of our business", says Tigran Khudaverdian, the director of Yandex.Taxi, director of the joint venture.
The deal marks another retreat for the San Francisco, California-based company following its withdrawal from China in August a year ago, when it folded its Chinese interests in with indigenous rival Didi Chuxing.
"This is an exciting opportunity in a unique situation and our operations in other countries will not be affected", Pierre-Dimitri Gore-Coty, head of Uber's business in Europe, the Middle East and Africa, wrote in an email to employees posted on the firm's website. In August 2016, Uber merged its Chinese business with its top competitor Didi Chuxing. "It allowed us to gain loyalty of tens of millions of consumers, and we are happy to continue our work with Uber".
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However, the United States ambassador's Spaso House residence and the Anglo-American School in St Petersburg would not be affected.
With Yandex's business, the new, as-yet-unnamed company will operate in 127 cities, compared to Uber's 21.
This deal, which will need regulatory approvals, will value the combined entity at over $3.4 billion. The more modest nature of this latest tie-up with Yandex reflects the smaller market, but it also goes some way toward improving Uber's balance sheet.
Tigran Khudaverdyan, head of Yandex.Taxi in Russian Federation, will become CEO of the merger.
The implied valuation for Yandex.Taxi of about $2 billion in the deal with Uber is "substantially" higher than the levels expected by the market, BCS Global Markets said in note to clients Thursday.
Following the merger, the driver apps will be merged, but customers will be able to use either Uber or Yandex.Taxi to hail either company's cars in countries where one is predominant. Driver apps will be integrated after the transaction closes.