Updated Aug. 1, 2016 1:38 a.m. ET
Global ride-hailing giant Uber Technologies Inc. has given up its costly battle for China’s riders, swapping its local operations there for a minority stake in the country’s homegrown champion.
SAN FRANCISCO — The great ride-sharing war in China has finally ended.
Didi Chuxing, the largest ride-hailing service in China, plans to buy Uber China, the Chinese arm of the American ride-sharing giant, in a deal that values the new company at about $35 billion, according to two people with knowledge of the deal.
The merger is a great détente between the two companies, which for more than a year have been ruthlessly battling for market share in mainland China, spending tens of millions of dollars every month to attract riders and drivers.
Three years ago I traveled to China with a small group of people to see if we might be able to launch Uber there,” Travis Kalanick, Uber’s chief executive, said in a blog post shared with The New York Times that will be posted when the company officially announces the deal. “Most of the people we asked for advice thought we were naïve, crazy — or both.”
“However, as an entrepreneur, I’ve learned that being successful is about listening to your head as well as following your heart,” he wrote. “Uber and Didi Chuxing are investing billions of dollars in China and both have yet to turn a profit there.”
Under the terms of the deal, which was to be announced as soon as Tuesday, the new company’s estimated worth is a combination of Didi Chuxing’s $28 billion valuation, according to these people, who requested anonymity because the information had not yet been made public, along with Uber China’s $7 billion valuation. Investors in Uber China will receive a 20 percent stake in the new company.
Didi Chuxing will also make a $1 billion investment in Uber Global, which was last valued at $62.5 billion, according to these people. Bloomberg first reported news of the deal.
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