Summary: In order to stop the expensive legal fight from continuing in China, Uber and Didi decided to join their forces and work together.
Uber, a ride-hailing company, has faced resistance just about everywhere it goes. China has been no exception to Uber’s troubles, squaring off with its rival company Didi Chuxing for over two years. The two companies have finally come to a resolution to merge together in the country.
The terms of the deal require Uber China to merge under the control of Didi, valued at $28 billion. In exchange, Uber will receive a 20 percent stake in the company in what is now a company valued at $35 billion. In other words, Uber gains $7 billion in value when they only spent $2 billion in the country. Didi will also invest in Uber, who’s valuation comes in at nearly $70 billion.
Read Uber Allowed to Operate in France Though Bans Continue Worldwide.
Uber originally fought back in China against Didi but CEO Travis Kalanick understood when to throw in the towel. He wrote on a blog post, “As an entrepreneur, I’ve learned that being successful is about listening to your head as well as following your heart. 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.”
The solution is expected to be a win-win for both companies. Didi claims companies such as Alibaba and Tencent has big investors and has a partnership with Uber’s rival in the U.S., Lyft. Apple recently invested in Didi as well. General Motors invested in Lyft. Didi also partners with Grab, a company in Southeast Asia that is another one of Uber’s competitors. By Uber joining with Didi, they turn their competitors into allies and gain some of the biggest companies in the world as investors.
Read Lyft Drivers Sue Uber for Alleged Sabotage.
Do you think Uber will try to merge with any other of their competitors in other countries? Tell us your thoughts in the comments below.
To learn more about Uber’s legal troubles, read More Uber Worker Misclassification Lawsuits Filed.
Uber Panda Photo: uber.com
Didi Photo: photobunch.com