Online taxi service Uber is ceding its ride-hailing business in Russia and ex-Soviet markets by merging with local rival Yandex. It is Uber’s second retreat from a major market after quitting China last year.
Uber will invest $225 million, while Yandex will invest $100 million in the joint venture, the companies said. The merged company will operate in Russia, as well as in Azerbaijan, Armenia, Belarus, Georgia, and Kazakhstan.
The Uber business in Ukraine is not part of the deal, a representative of Uber stressed.
Both mobile applications will still be available. 59.3 percent of the company will belong to Yandex, 36.6 percent to Uber, and 4.1 percent to the employees of the new business.
Tigran Khudaverdyan, head of Yandex.Taxi in Russia will become CEO of the joint enterprise. Together, the two firms handle 35 million rides a month.
The new company, which has not yet been officially named, “will have the right to use Yandex.Taxi and Uber brands in the region,” the companies said.
In Russia, Yandex.Taxi has about $1 billion gross bookings per year, while Uber had $566 million. The Yandex taxi service lost about $35 million last year.
The merger ends the two companies’ four-year battle for the Russian market. Price undercutting in Russia has led to some of the cheapest fares in Europe with rides starting from only 99 rubles ($1.65).
Shares in Yandex surged 22 percent, hitting a record 1992 rubles (about $33) on the news. Uber is not publicly traded.
In 2016, after $2 billion in losses, Uber left China in exchange for a 17.5 percent share in local competitor Didi.
Uber is also reportedly facing continued losses in India and Southeast Asia and is mulling mergers with local leaders Ola and Grab, according to Bloomberg.