Uber has agreed to merge its ridesharing and UberEATS businesses in Russia and several other Eastern European countries with Yandex.Taxi, the cab-hailing company of Russian search engine giant Yandex.
The as-yet-unnamed new entity, which also covers operations in Kazakhstan, Azerbaijan, Armenia, Belarus and Georgia, would have a valuation of $3.7 billion. Yandex will own 59.3% of tie-up and has agreed to invest $100 million into the business, while Uber will invest $225 million and hold a 36.6% stake.
Uber remains the No. 1 ridehailing operator in the US, but it has faced competition headwinds in Europe and elsewhere—with the Yandex ceasefire not the first time the company has called a truce. Last year it ended a long, and expensive battle for market share in China by merging its business there with local rival Didi Chuxing.
Uber has perhaps taken note from that experience and is making more strategic moves following the ousting of CEO Travis Kalanick last month. The deal with Yandex indicates the company is no longer willing to sink billions in an effort to grab market space against a local rival with home advantage, deep pockets and, in this case, a technical advantage due to Yandex’s maps technology.
Amid an eight-month timeline of woes at Uber, the company has also faced a number of regulatory issues in Europe. In March, it shut down its Danish operations following new laws that made features such as meters and mandatory. And in May, a non-binding judgement by European Court of Justice advocate general Maciej Szpunar said that Uber should be treated as a transport company rather than a technology one, which could potentially make it bound by local taxi laws on the continent.
Later in May, Uber announced an estimated 1Q loss of $708 million, down from the $991 million loss in 4Q 2016.