China’s ride-hailing Didi Chuxing Technology has reached an agreement to merge with Uber Technologies’s China operations, in a share-swap deal, people familiar with the matter said to WSJ. Uber will become the largest shareholder in Didi Chuxing with a 20 percent stake in the combined company.
The deal put an end to Uber and Didi competition for Chinese passengers. Uber has lost more than $2 billion in china, people familiar with the matter said.
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Didi is making a $1 billion investment in Uber at a $68 billion valuation, people familiar with the deal told Bloomberg. Didi raised $7.3 billion in June, valuing the Chinese ride-hailing startup at $28 billion. $1 billion investment come from Apple. Other backers of Didi Alibaba Group Holding and Tencent Holdings.
Travis Kalanick, chief executive officer of Uber, wrote in a blog post obtained by Bloomberg :“As an entrepreneur, I’ve learned that being successful is about listening to your head as well as following your heart, ” he wrote, “Uber and Didi Chuxing are investing billions of dollars in China and both companies have yet to turn a profit there. 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.”
Last week China legalized ride-hailing services, paving the way for futur expansion of these businesses.
