Chinese ride-sharing service Didi Chuxing Technology Co. announced Monday it purchased Uber China, ending the standoff between the two companies.
The merger comes after a lengthy battle where the companies raised a combined $20 billion in order to vie for the competitive advantage, reports the Wall Street Journal. A spokeswoman for Didi stated in June the company had “absolutely no plan to merge.”
In exchange for operations in China, Uber received a 20 percent stake in the Chinese ride sharing company, making it the largest investor in the Chinese company, reports the Wall Street Journal. Uber’s Chinese operations were valued at some $8 billion dollars, making Didi’s new market valuation at around $36 billion — a figure still nearly half that of the San Francisco-based ride sharing company.
Didi will reportedly invest $1 billion in Uber as part of the deal, reports the Wall Street Journal.
Following the announcement, Uber CEO Travis Kalanick said the merger “frees up a substantial resources for bold initiatives focused on the future of cities—from self-driving technology to the future of food and logistics.”
Kalanick will become a board member of Didi, while Didi’s founder Cheing Wei will join Uber’s board. Cheing, along with Didi’s president Jean Liu, released a public statement calling Uber “a great competitor” in what was an “epic battle,” reports the Wall Street Journal.
Didi also said it will “integrate the managerial and technological experience and expertise of the two teams.”
UberChina has spent over $1 billion dollars subsidizing both riders and drivers over the past three years, in efforts to gain leverage in the Chinese ride-sharing marketplace.
A longtime technology consultant in China, Duncan Clark, stated recently that the cost of subsidies for Uber were unsustainable and “they couldn’t have gone public with that black hole,” reports the Wall Street Journal. China recently released new regulations that forbid ride-hailing services to operate below cost.
The news of this merger could spark a brighter future for the Chinese-based ride sharing service. When Uber announced it’s partnership with Alipay in May of 2016, it skyrocketed the company into 69 new countries, reports the Wall Street Journal.
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