US-based global ride-hailing giant, Uber has given up its local operations in China to a local tech startup Didi Chuxing for an exchange of a minority stake in the later. After the merger, Uber will become the largest shareholder in Didi. Early this year, Uber announced that it has raised $7 billion in fresh funds to further expand in China.
Travis Kalanick, CEO and Co-Founder of Uber, wrote in 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 Chinese ride-hailing company will also invest $1 billion in Uber as part of the deal, reported WSJ citing a person familiar with the matter.
Excited for Uber China and Didi to merge—huge congrats to our team. Take a look at some thoughts from @travisk: https://t.co/oOJ72TyhGD
— Uber (@Uber) 1 August 2016
New Didi = Uber China + Didi = $35B
— Chamath Palihapitiya (@chamath) 1 August 2016
New Uber = Uber RoW = $68B
Uber Ownership in Didi = 50% * 20% * $35B = $3.5B
New Uber = 2x New Didi ?
