Faced with massive losses in China, Uber is finally ready to take a backseat in the massive market, where it’s been soundly beaten by domestic ride-hailing service Didi Chuxing.
As reported by Bloomberg and confirmed later by other news outlets, Uber will merge its China business with Didi, creating an entity worth a combined $35 billion.
While this may herald the end of Uber’s direct efforts in China, the Bloomberg report noted that Uber will get 20 percent of the new combined entity. This gives it a healthy stake in the rapidly growing Chinese ride-hailing market, so it isn’t all a loss for the U.S. firm.
The deal also includes Didi making a $1 billion investment into Uber at a $68 billion valuation. In May, Didi Chuxing was valued at $28 billion.
While it doesn’t appear to exist on Uber CEO Travis Kalanick’s social accounts, this alleged blog post started circulating on WeChat on Sunday:
The news has immediately led to speculation that Uber was now more likely to go public, since its money-losing efforts in China would no longer drag on its business.
Uber has tried for the past two years to gain a foothold in China, where it’s been burning through$1 billion a year trying to compete with Didi.
Didi itself is a merger from two powerhouse ride apps, Didi Dache and Kuaidi Dache, and has a killer 87 percent market share of private cars, and 99 percent of taxis. It also operates in over 400 Chinese cities, while Uber has struggled to expand beyond 60
This news comes days after the Chinese government legalised ride-hailing in the country, giving legitimacy to apps like Didi and paving the way for more investor confidence.