Uber cedes control in Russian market with Yandex tie-up


Uber Technologies Inc is handing over the keys to its business in Russian Federation. Uber will invest US$225mil (RM965.36mil) and take a 36.6% stake in a new, yet-to-be named venture that will be valued at US$3.73bil (RM16bil), the companies said in a statement on July 13.

The move comes during a troubled time for Uber as it reels from months of controversies including harassment and sexism allegations that led to an investigation, a high-stakes lawsuit with Google's Waymo, revelations of secretive tools to deceive law enforcement and rivals as well as a slew of departures.

The San Francisco-based company exited from China previous year, signalling another retreat in its breakneck expansion across the globe.

Uber has suffered another setback in what was once a very aggressive plan for global expansion, as the company has agreed to a merger with Yandex for their ride-hailing services in Russian Federation and five countries in Eastern Europe. Uber does not now operate in Armenia and Georgia. The deal is expected to close within the last three months of the year, but the apps of Uber and Yandex will continue to function separately for the foreseeable future.

Uber said the merger did not imply a strategy of further retrenchment elsewhere. Indeed, financial terms of the deal make it a lucrative one, it said. It allows Uber to strike a deal. Under their watch, the company inked an armistice with Didi past year, partnerships with automakers Daimler AG and Toyota Motor Corp, and with credit card companies including American Express Co.

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Uber said in May its net loss, excluding employee stock options and other items, narrowed in the first quarter to $708 million from $991 million in the fourth quarter. This week, it told investors that losses continued to decline in the second quarter, a source familiar with the report said.

"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", he said.

"Many of us who work inside Yandex feel that everyone has already switched to ride-sharing, but in reality, we are just at the beginning of this journey", Khudaverdyan wrote in a blog post.

Otkritie brokerage analyst Timur Nigmatullin estimated that, before the deal, Yandex.Taxi represented around 20 per cent of the parent company's market capitalisation. Uber and Yandex project an annual run rate of 419 million rides and $1.6 billion in gross bookings.

"The effective elimination of Yandex's most risky competitor represents the key upside surprise, while it should also point to an easier and shorter path to profitability", BCS said.