Uber to combine China business with Didi Chuxing in $35 billion merger

It counts technology giant Apple as a shareholder.

Uber and Didi could not be immediately reached for comment.

This is a breaking news story.

The company, formerly dubbed the world’s most valuable startup, now has a valuation of $68 billion.

Uber has spent billions in China – a Bloomberg source said it is losing $2 billion per year in the country – so it looks like the same reasons are behind this second merger deal, albeit that the potential repercussions are very different.

Uber and Didi Chuxing, on the other hand, are happy about their businesses being legal in China.

As per the new structure, investors in Uber China – a company owned by Uber and other investors – will have 20% stake in the merged firm.

“As an entrepreneur, I’ve learned that being successful is about listening to your head as well as following your heart”, Kalanick, writes in the blog. “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”.

Uber appears to be taking the new rules in its stride, despite the fact that their business model operates on giving out ridiculously cheap rides in order to lure passengers. Offloading its Chinese unit could put Uber on track to finally list as a public company. Both Uber and Didi have been spending significantly to compete in China.

By the way, Didi has investments from China bigwigs Alibaba and Tencent and also has a partnership with Uber’s USA rival Lyft, as well as Grab of Indonesia, also an Uber competitor.

Whether the new rules will do anything to alleviate the competitive challenges facing San Francisco-based Uber in China is unclear.

Before it’s here, it’s on the Bloomberg Terminal.