Uber and Yandex on Thursday announced that they’re combining their ride-sharing businesses in Russia, with the new firm being set to boast a valuation of more than $3.7 billion after investments both companies agreed to make. While officially a merger, the deal essentially sees Uber selling its unit in the Eurasian country, with the San Francisco, California-based ride-hailing giant owning only 36.6 percent of the new venture that has yet to be named. The Russian Internet company will hold a 59.3-percent stake in the consolidated entity, while a 4.1-percent share of the business will be given to its employees. Yandex.Taxi Chief Executive Officer Tigran Khudaverdyan will also be heading the new unit whose board will be seven directors strong, with Uber and Yandex appointing three and four of them, respectively.
Uber pledged to invest $225 million in the new venture while Yandex is set to commit $100 million to the business, the companies said, though it’s currently unclear when exactly will these obligations be fulfilled. Yandex started as an online search company in the late nineties before expanding its operations to numerous tech-related fields in a shift that some industry watchers compare to that of Google. The company started its ride-sharing business in its home country in 2011, three years before Uber’s arrival in Russia.
The latest turn of events bears some resemblance to Uber’s 2016 deal with Didi Chuxing; less than a year ago, the ride-hailing firm agreed to sell its Chinese business to its largest competitor in exchange for a one-time $1 billion investment and a 17.7-percent share of Didi. Much like the deal in the Far Eastern country, Uber’s decision to sell its Russian unit came relatively suddenly but isn’t entirely surprising, with the Californian firm previously engaging in a price war with the local competitor and ultimately opting to join forces with the rival instead of prolonging such a state of affairs. The new deal between Uber and Yandex is expected to be concluded by the end of the year, presumably in the final quarter of 2017. The transaction will allow Uber to focus on other markets and an update on its efforts to do so should follow in the coming months.