Uber Technologies, the world’s largest taxi-hailing service, will sell its China business to local rival Didi Chuxing, creating a business valued at around $35 billion, reports said on Monday.
The merger will end a battle between Uber and Didi, which were fighting for supremacy on the roads of the world’s second-largest economy over the past couple of years.
Investors in Uber China, an entity owned by San Francisco-based Uber, Baidu Inc and others, will receive a 20 % stake in Didi, according to Bloomberg news agency.
“Uber, which is retreating after years of losses in China, will continue to operate its own app in the country for now. In addition to Uber selling its Chinese subsidiary, the complex deal involves Didi making a $1 billion investment in Uber, people familiar with the matter said. Didi had no comment, and Uber declined to comment,” Bloomberg reported.
The report of the merge came a day after the Chinese government legalised cab-hailing services, which authorities were operating in a “gray area” till now.
A document released by the State Council, China's cabinet, featured guidelines for the registration and operation of on-demand mobility (ODM) services.
In June, Uber China had announced plans to expand its ride-hailing service to 100 Chinese cities this year. It now operates in nearly 60 cities, including many lower-tier cities also targeted by Didi.
At the same time, Didi had announced that it had secured $7.3 billion in equity and debt financing, ramping up the Beijing startup's cash pile to $10.5 billion.
“Didi raised $4.5 billion in equity financing, including $1 billion from Apple and $300 million from China Life Insurance. It also counts earlier backers such as Alibaba, and its financial spin-off Ant Financial, Tencent, China Merchants Bank and SoftBank as participants in its latest round of equity financing. The company also secured $2.5 billion in syndicated loans led by China Merchants Bank and 2 billion yuan (around $300 million) in long term debt from China Life Insurance,” state-run Xinhua news agency reported.
Xinhua had also reported that firms such as Didi Chuxing and Uber had operated in a “gray area” in China as there was a law against drivers of private cars carrying passengers for profit. “The latest document specifies that ODM firms do not need to have their own fleet, effectively allowing private cars,” it said.
A provisional rule released by the transport ministry detailed requirements for ODM companies and drivers.
“Cars are no longer allowed to offer rides after they clock up 600,000 km or have been in use for eight years, while drivers must have no criminal record related to drugs, driving, alcohol or violence,” according to the new rules.
The China Internet Network Information Centre said about 96.6 million Chinese, or about one in every 14, hailed a taxi via online ODM services last year, while 21.6 million people booked private cars online.