A planned merger between Russia search engine giant Yandex and Uber should be complete in the first half of February. The two are currently finalizing terms of the agreement, after failing to merge last month, as planned.
The merger was first floated in July 2017, when the two announced plans to combine their ride-sharing businesses in Russia, Kazakhstan, Georgia, Belarus, and Armenia. Late last year, the two received all the needed regulatory approvals setting the stage for the merger.
Pursuant to the merger agreement, Yandex is to invest $100 million into the joint venture. Uber has agreed to invest $225 million, which will take the valuation of the combined company to $3.725 billion, post-money basis.
The search giant is to own 59.3% of the combined company with uber owning 36.6%. Employees are to own the remaining 4.1 %. Head of Yandex. Taxi in Russia is to become the Chief Executive Officer of the combined company.
Once the transaction is closed, consumers will be able to use both Yandex taxi and Uber apps as driver apps are integrated. Both companies will operate their respective apps and be able to hire drivers from each other.
The combined business financial strength is set to receive a major boost after Russian Direct Investment Fund CEO, Kirill Dmitriev indicated plans to invest tens of millions of dollars in the company. The combined company should thrive given that the Russian economic policy favors local and uncontrollable technology companies that own a lion share of the local business.
The Federal Antimonopoly Service of the Russian Federation in its approval statement emphasized that the ride-sharing market is rapidly growing thus calling for a greater aggregation of such services. Yandex. Taxi and Uber currently handle 35 million rides a month.
The merger, on the other hand, is part of Uber’s renewed effort to improve revenue and trim losses after a poor run of results in recent years.
“This deal is a testament to our exceptional growth in the region and helps Uber continue to build a sustainable global business,” Pierre-Dimitri Gore-Coty, Uber’s chief for Europe, Middle East, and Africa, said in the statement.
A deal with Yandex will allow Uber to exit the Russian market the same way it did in China after coming under immense pressure from local players. The deal also raises questions as to whether the company will relinquish control of its operations in other countries, such as India, where it continues to post losses amidst stiff competition.