Uber is merging with Yandex in Russian Federation a year after exiting China

Uber is merging with Yandex in Russian Federation a year after exiting China

The San Francisco-based ride-hailing service will merge with Yandex in six countries: Russia, Azerbaijan, Belarus, Kazakhstan, Armenia, and Georgia.

Uber will invest $225 million in the new company and Yandex $100 million, putting its value at over $3.7 billion.

59% of the new company will belong to "Yandex", 36.6% of Uber. The remaining 4.1% will go to employees.

"The new company's goal will be to serve the needs of riders, drivers and cities as we develop a fast-growing, sustainable ride-sharing, food delivery and logistics business in the region", Uber Europe, Middle East and Africa head Pierre-Dimitri Gore-Coty said.

Uber has already conceded to rivals in China, forming a joint venture with Didi Chuxing previous year.

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Yandex already operates a ridesharing service in Moscow and several other Russian cities, but this service will now merge with Uber's services under the new company. Based on data provided by Yandex, Uber did less than 12 million rides in June 2017, while Yandex.Taxi did close to 24 million.

Yandex, which has been referred to as the "Google of Russian Federation", has an expensive mapping database and can market its services online with the new company. It will value its stake at nearly $1.4 billion.

The new company will cover 127 cities of 6 countries and carry out 35 million transfers monthly. Uber's deal with Yandex shows a company developing a more nuanced, realistic view of the world-one in which Uber must now contend with a legion of local and regional copycats.

The implied valuation for Yandex.Taxi of about $2 billion in the deal with Uber is "substantially" higher than the levels expected by the market, BCS Global Markets said in note to clients Thursday. Yandex, often called the "Google of Russia" is a well established brand and has an extensive mapping database which puts it at an advantage over Uber, reports the New York Times. It's a roaming deal similar to what US ride-hail rival Lyft attempted with China's Didi and other regional competitors.

After the closing of the transaction, consumers will be able to use both Yandex and Uber apps while the driver-side apps will be integrated. Once that happens, they plan to integrate their driver apps.