Finance

After China, Uber cedes Russian business to rival Yandex

After China, Uber cedes Russian business to rival Yandex

Together, their businesses handle 35 million rides a month, and will also operate in Kazakhstan, Azerbaijan, Armenia, Belarus and Georgia.

"The new company's goal will be to serve the needs of riders, drivers and cities as we develop a fast-growing, sustainable ride-sharing, food delivery and logistics business in the region", he said.

San Francisco-based Uber has agreed to invest $225 million (13.5 billion roubles) while Yandex will contribute $100 million into a new joint company in which Yandex will own 59.3 per cent and employees will have a 4.1 per cent stake.

"Combining Yandex's local expertise in search, maps and navigation with our leading global experience in ridesharing will enable us to build the best local services and provide a credible alternative to vehicle ownership across the region", said Pierre-Dimitri Gore-Coty, head of Uber's business in Europe, the Middle East, and Africa, in a statement.

Uber is merging its business in Russian Federation with Yandex, a dominant player in the Internet business in that nation and Eastern Europe.

The whirlwind of scandals eventually led to Uber founder Travis Kalanick's resignation last month.

After the merger with Yandex in Russia Uber will not make the headquarters of the CIS in Kiev.

The JV is "a strategic positive" for Y.Taxi, Yandex's ride-sharing company, by preventing a costly market share battle, the analysts write. "Combining Yandex's local expertise in search, maps and navigation with our leading global experience in ridesharing will enable us to build the best local services and provide a credible alternative to auto ownership across the region". The deal allowed Uber to keep its competitive foothold in China with its roughly 20 percent stake in Didi which Uber said has risen in value by $2 billion.

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Uber has faced a number of legal challenges by European cities and countries, and shut down its Danish operations last spring when new taxi laws took effect.

A Yandex taxi is seen in central Kiev, Ukraine.

Russia's federal anti-monopoly regulator said the deal could pose risks to competition and a thorough analysis was needed before it could be approved, local news agencies reported.

"The effective elimination of Yandex's most risky competitor represents the key upside surprise, while it should also point to an easier and shorter path to profitability", BCS said.

As part as the deal, Yandex signed a roaming agreement with Uber so users of its taxi app can hail Uber rides when travelling overseas, Yandex executives said. And while each company will keep their brand, Yandex customers will be to able to use their app to summon Uber rides in countries where Yandex doesn't operate, and vice versa.

Uber said in May its net loss, excluding employee stock options and other items, narrowed in the first quarter to $708 million from $991 million in the fourth quarter.

Uber's plans of global domination now lie in disarray.