Uber Technologies Inc. is swapping its China operations for a big stake in its sworn enemy Didi Chuxing. The two companies announced the deal yesterday.
Didi would acquire Uber China in a $35 billion deal and the new company‘s estimated worth is a combination of Didi’s $28 bn and Uber China’s $7bn. The deal will end an expensive price war and is likely to allow the companies to raise prices and become profitable.
Some experts say the deal sees Uber admitting defeat as for the last two years it attempted to overthrow its fierce rival Didi Chuxing and take control over the fast growing Chinese market.
The rumor of a potential megamerger had been circulating for a few weeks with both parties denying it. Sources close to negotiations told that the two sides had tried to reach an agreement two times previously, however without success. So the third time proves to be lucky for the deal in the world’s largest ride-hailing market.
Under the terms of the deal, investors in UberChina unit will own 20 per cent of the merged Chinese company, which will be worth $35 billion, while Didi Chuxing will make a $1 billion investment at a $68 billion valuation.
