Brief: Uber pulls out of Russia market after deal with local rival

Photo credit: Mark Warner.

The news:

• In a case of history repeating itself a little too soon, Uber is pulling out of the ride-hailing arena in Russia, merging its business there with local rival Yandex.
• Yandex will hold a majority stake of 59.3 percent in the company born of the merger, while Uber will invest US$225 million for a 36.6 percent stake. The still unnamed new company’s value is US$3.73 billion, according to the former rivals.
• The deal is expected to be completed in the last quarter of 2017.

Why it matters:

• This is the second market Uber concedes to a rival outside its native US. Its Chinese unit was acquired by local incumbent Didi Chuxing in a US$35 billion deal.
• The US company faces fierce opposition at home and abroad, like Grab in Southeast Asia, Ola in India, and Lyft on its native soil. It’s also posted a US$708 million loss for Q1 2017 and has lost key personnel including CEO Travis Kalanick in a series of controversies.
• In this climate, investors are reportedly making the case for the company to follow a similar path in other markets and strike deals with competitors there.

Source: Bloomberg.