Uber’s China unit acquired by Didi in $35b deal

UPDATED four hours after publishing: Both Uber and Didi have just confirmed the deal. “Didi Chuxing and Uber have learned a great deal from each other over the past two years in China’s burgeoning new economy,” says Didi CEO Cheng Wei in a statement. “This agreement with Uber will set the mobile transportation industry on a healthier, more sustainable path of growth at a higher level.” Uber’s Travis Kalanick, meanwhile, posted his thoughts to Facebook. The rest of this article remains unchanged.

Uber’s China unit has been acquired by Didi Chuxing in a deal worth US$35 billion, according to Bloomberg today. The massive merger will see Uber’s service run independently in China separate from Didi’s own ride-hailing app.

It’s not the first time the rumor has appeared, but the Wall Street Journal this morning verifies the merger from its own sources, saying it will be announced officially sometime today.

Tech in Asia has contacted Uber’s China team and Didi, but has not yet received a response.

Price war ends

The US$35 billion is the estimated valuation of the newly combined company, made up of Didi and Uber China, the Shanghai-based subsidiary of the Calfornian startup. Investors in Uber China will receive a 20 percent stake in the merged firm, says Bloomberg citing its sources familiar with the deal.

Plus, Didi will invest US$1 billion in Uber China.

“Uber and Didi Chuxing are investing billions of dollars in China and both companies have yet to turn a profit there. 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,” writes Uber boss Travis Kalanick in a blog post said to be published later today.

The merger will end the cash-burning bonanza that saw both Didi and Uber’s China unit offer hefty subsidies to drivers and passengers, often resulting in car rides that cost barely more than a bus fare.

This is a developing story…