Ousted Uber CEO Kalanick Said to Have Been Involved in Yandex Deal

Uber merges its eastern European arm with Russian rival Yandex

San Francisco-based Uber has agreed to invest $225 million (roughly Rs. 1,450 crores) while Yandex will invest $100 million into a new joint company in which Yandex will own 59.3 percent, Uber holds 36.6 percent and 4.1 percent by employees on a fully diluted basis.

Of course this success would not have been possible without our fantastic team in the region and I am pleased to say that as part of today's agreement all full time Uber employees in the countries involved will be part of the new company.

The merger has not been finalized yet and is still subject to regulatory approval, but Uber expects the deal to close by Q4 of this year.

Kalanick and Michael both recently left operation roles at Uber amid a series of scandals, including a human resources overhaul, sexual harassment allegations, and a trade secret dispute. Four members from Yandex will be on the board, with three seats for Uber.

The new company - which will be headed up by Tigran Khudaverdyan, who now serves as the CEO of Yandex.Taxi - will also tap Yandex's existing technologies including maps and navigation.

The as-of-yet unnamed company will operate in 127 cities across six countries across the former Soviet Union (Russia, Azerbaijan, Armenia, Belarus, Georgia and Kazakhstan).

For months, Uber has struggled with legal setbacks, accusations of a sexist work culture and driver protests, culminating in the June departure of co-founder and CEO Travis Kalanick under investor pressure. They were key deal-makers for Uber. Uber EATS, Uber's food deliver service, will also be joining with Yandex under the combined business.

It's been a costly and hard three-and-a-half years since Uber launched its services in Russia's capital city of Moscow.

Uber is getting a little bit of help in Russian Federation and five other countries. Apps from both ride-hailing companies will continue to be offered, while the driver app will become a single platform.

Uber's own spin on the news is positive.

"Since founding Yandex.Taxi in 2011, we have connected tens of millions of riders and drivers to become the largest and most trusted ride-sharing business in Russian Federation and neighbouring countries".

The two competed for local taxi and ride-sharing customers, and the deal is a big win for Yandex.

Following completion, passengers will be able to continue to use either Yandex or Uber apps. "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.

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