Last August, Uber was forced to retreat from China after inking a deal with ride-sharing rival Didi Chuxing, while taking a 17.5% stake in the company. It looks like the same recipe for success will be now applied in Russia, where Uber and Yandex have agreed to a similar arrangement, although this time around Uber isn’t leaving this huge market.
Uber and Yandex decided to merge their operations in the country, as per Bloomberg. Uber will invest $225 million in the new company, which will operate under a new name, and Uber will own a 36.6% stake. Yandex will invest a lot less than Uber, just $100 million, but it’ll own 59.3% of the new venture that will be valued at $3.73 billion.
“This deal is a testament to our exceptional growth in the region and helps Uber continue to build a sustainable global business,” Uber’s chief for Europe, Middle East, and Africa Pierre-Dimitri Gore-Coty said in a statement. That’s one way to put it. But Yandex will call the shots and head of Yandex.Taxi, Tigran Khudaverdyan, will become the new CEO. The UberEATS food delivery service is also included in the deal.
The newly formed company is expected to handle 35 million rides a month in Russia and other countries in the region, including Kazakhstan, Azerbaijan, Armenia, Belarus, and Georgia. Things are not going to change for end users, who will be able to use Yandex.Taxi and Uber after the deal is finalized. Drivers, however, will have to use a new app.
Like the China deal, this new agreement should help Uber stop burning through so much money. Uber lost more than $2 million while fighting Didi in China. In Russia, Yandex.Taxi beat Uber by an almost 2-to-1 factor when it comes to gross bookings. That’s $1.01 billion in yearly bookings for the Russian company compared to $566 million for Uber.