Didi Chuxing, the most notorious ride-hailing service in China, said that it would acquire Uber Technologies operations in China. It is noteworthy that there was a battle between these two companies, which cost the two companies billions as they competed with each other.
Didi founder Cheng Wei and Uber Chief Executive Officer Travis Kalanick will join each other’s boards. The Chinese company said in a statement that it would buy Uber’s brand, business, and data in the country. Uber will receive 20 percent of the economic stake in a unified company, including Uber Technologies, search giant Baidu Inc. and Uber China’s other shareholders.
This deal brings up a cease-fire between the battle of these two companies. Cheng Wei, the CEO of Didi, said,
“This agreement with Uber will set the mobile transportation industry on a healthier, more sustainable path of growth at a higher level”.
Furthermore, some sources say that Didi’s valuation will be $35 billion after the deal.
Deng Zhisong, the senior partner at Beijing-based law firm Dentons, conferred,
“The ministry of commerce has to define the size of the market and see if the car-hailing business Didi and Uber are offering can be replaced by similar services” in continuation he said, “If you count taxi services and public transportation, the car-hailing sector will not have a market share that significant.”
“Uber and Didi Chuxing are investing billions of dollars in China, and both companies have yet to turn a profit there. Getting to profitability is the only way to build a sustainable business that can best serve Chinese riders, drivers and cities over the long term”,
in the words of Uber’s Chief executive, Mr. Travis Kalanick.
Besides walking away from China’s operation, Uber is now holding a stake in the biggest company over there and looking forward to gaining all its losses.