Ride-hailing app Didi Chuxing to acquire Uber China

The transaction is said to value the combined company at $35 billion. Didi said in a statement that it will take ownership of all Uber China's assets, including its brand, operations and database. However, Uber China will retain its independent branding and business operations to "ensure stability and continuity of service for passengers and drivers."

Didi will take the lead in integrating the managerial and technological expertise of the two companies, as well as the sharing of resources and user bases.

Uber's global parent will receive a 5.89% stake in the combined entity with preferred equity, which equates to a 17.7% economic interest in Didi. Existing Uber China investors, which include Chinese internet search giant Baidu and HNA Group, will get a 2.3% stake in the new business. Travis Kalanick, co-founder and CEO of Uber, will join the Didi board, while Didi founder Wei Cheng gets a seat on Uber's board.

"Didi Chuxing and Uber have learned a great deal from each other over the past two years in China's burgeoning new economy," Cheng said in the statement. "This agreement with Uber will set the mobile transportation industry on a healthier, more sustainable path of growth at a higher level."

Jean Liu, Didi's president, noted that the merger will not undermine the company's ambition to go global. It will continue to work with partners at home and abroad to "create more value for drivers, passengers and the industry."

In mid-June, Didi announced it had raised $7.3 billion in new funding, comprising $4.5 billion in equity and $2.8 billion in debt. The round is said to value the company in excess of $25 billion. Its previous round closed in September 2015 at $3 billion, with the overall valuation topping $15 billion. This was the first fundraising effort since the company was formed through the merger of Didi Dache and Kuaidi Dache.

San Francisco-headquartered Uber embarked on an aggressive expansion plan in China, forming strategic alliances with Baidu and Hillhouse Capital. The US firm set up a dedicated China unit in September 2015, raising capital in January of this year at a valuation of $7 billion. HNA, Guangzhou Automobile Group and China Life Insurance were among the investors.

Uber claimed to have built a 35% market share in China but this figure was contested by Didi, which says it controls 80% of the market. The Chinese company also claims to be the world's largest mobile travel platform, with 300 million registered users, nearly 15 million registered drivers and booking services that include but are not limited to taxis, limousines, shuttles, car-pooling, and designated drivers.

With a common interest to counter the Uber threat, Didi forged a strategic global partnership last year with India's Ola, Southeast Asia's Grab and US-based Lyft to allow each company to use the others' services. In addition, it has made equity investments in all three of these counterparts.

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• Topics
• Greater China
• Technology
• Buyouts
• Venture
• Expansion
• China
• TMT
• Transportation
• China Life
• Baidu
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