Yandex.Taxi, Uber agree to merge businesses in Russia, Armenia and beyond

Dmitriy Serebriakov  TASS

Shares of Russian search-engine leader Yandex (NASDAQ:YNDX) lifted off in a big way on Thursday, on news of an important deal with Uber Technologies.

Uber's Russian operations will merge with its rival Yandex, whose Yandex.Taxi service operates in Russia and several former Soviet nations. Uber will invest $255 million, taking a 36.6% stake in the new venture that is set to have a valuation at $3.73 billion.

The deal has echoes of Uber's previous moves in China, where the company sold its operations wholesale to native ride-sharing firm Didi Dache (滴滴打車) a year ago.

According to a press release, the company's head of business in the region, Pierre-Dimitri Gore-Coty, said Uber is investing $225 million in the new company on top of the $170 million the company already put into the region.

After selling its Chinese business in August previous year, Uber has now yielded its clout overseas again - this time to merge its Russian business with the taxi arm of Russian search engine giant Yandex. Additionally, Uber will also roll its UberEats food delivery service into the new venture. Uber, which raised funds regularly in 2015 and 2016, raised an undisclosed amount from German Investor Axel Springer this year, the only fundraising activity this year according to Crunchbase.

Ousted Uber executives Travis Kalanick and Emil Michael were involved in making a mega-deal with the "Google of Russia" on ride-hailing, the company's top brass told CNBC.

More than 35 million rides were performed in June between the two operations, collecting more than $130m in gross bookings. It will value its stake at nearly $1.4 billion. Uber had been bleeding money in China. Uber's deal with Yandex shows a company developing a more nuanced, realistic view of the world-one in which Uber must now contend with a legion of local and regional copycats. NewCo will keep both brands operational, but unveiled plans to introduce a common technological platform to drivers.

With the Yandex deal, Uber will also be appointing three board members for this new company.

The transaction is expected to close in the fourth quarter and is subject to regulatory approvals and other conditions. The driver apps, however, will be combined.

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