Uber’s Chinese rival acquiring company’s China operations

The California startup has been reportedly spending at least billion per year to try to dominate the massive Chinese market, while Didi Chuxing has spent similar amounts of money trying to stave off its American rival.

San Francisco-based Uber Technologies will receive a 5.89 percent stake in Didi – but will have disproportionate “economic interests” of 17.7 percent with another 2.3 percent interest going to Uber China shareholders. This competent plays the dominant role in ride-hailing services in the country. Didi Chuxing past year announced a $100 million investment in Uber competitor Lyft, which ranks as the sixth-largest human cloud firm.

Under the agreement, Didi Chuxing will acquire Uber China’s brand, business operations and data.

Bloomberg first reported the news of the merger/acquisition/truce, noting that while Uber claims to be profitable in the USA and Canada, huge losses in China have hindered the company overall.

Crowdsourced ridesharing and transport giants Uber China and Didi Chuxing will be merging their operations. However, we’d be surprised if drivers for Uber China didn’t work on the same ride-hailing network as their peers at Didi Chuxing.

Uber China launched in 2014 but so far has failed to make any profit.

Didi confirmed the deal later on Monday, saying that Didi and Uber Global will become each other’s minority stockholders and both heads will join the other’s board of directors.

Cheng Wei, founder and chairman of Didi Chuxing, will join the board of Uber. With backers Alibaba and Tencent as well as $1 billion from Apple, Didi was valued at $28 billion before the merger and $35 billion after it compared to Uber’s sky-high $68 billion valuation.

Didi also said it will “integrate the managerial and technological experience and expertise of the two teams”.

The deal comes after China last week issued guidelines that establish a long-awaited framework for the booming ride-hailing industry and remove uncertainty for firms such as Didi and Uber.

“Most people thought we were naive, insane – or both” because the firm was “a young American business entering a country where most United States internet companies had failed to crack the code”, he said.