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Uber China to merge with rival Didi Chuxing

Engadget Engadget 1/08/2016 Steve Dent
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Uber has agreed to sell its Uber China arm to arch rival Didi Chuxing in exchange for a 20 percent stake in the merged operation, according to reports from Bloomberg and others. The combined company is reportedly worth $35 billion, giving Uber a $7 billion share. Didi will continue running Uber under its own brand for the foreseeable future. "Uber and Didi Chuxing are investing billiongs of dollars in China and both companies have yet to turn a profit there," Uber CEO Travis Kalanick said in a blog post seen by Bloomberg.

The deal comes just days after China legalized ride-hailing apps in the nation, but the companies have been in talks for a long while. In addition, Apple recently bought a large chunk of Didi Chuxing, meaning it's now has a tenuous financial tie to Uber. As part of the deal, Didi is reportedly investing $1 billion in Uber, giving the US ride-sharing firm a valuation of $68 billion.

While Uber reportedly runs a profit in well-developed markets, it has lost over $2 billion in China. "Getting to profitability is the only way to build a sustainable business that can best serve Chinese riders, drivers and cities over the long term," Kalanick said. Uber's private equity investors were also reportedly anxious for it to unload its unprofitable Chinese holdings, so the sale now paves the way for Uber to launch an IPO and become a public company.

Bloomberg, The Information (subscription)

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