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Russia’s Yandex Takes Lion’s Share of Uber Deal

The search engine giant will control almost 60 percent of a new ride-sharing company with a six-country reach.

14 July 2017

Uber and Yandex have agreed to combine their ride-hailing businesses in a deal that extends the Russian company’s reach beyond its core search engine business.

 

Dubbed the “Google of Russia,” Yandex launched a taxi service in 2011 and has been Uber’s biggest rival in the scramble for market share, Bloomberg reports.

 

Yandex shares rose 20 percent after yesterday’s announcement, according to Reuters.

 

"With this deal Yandex eliminates an aggressive competitor which, in the long run, will lead to improved monetization and profitability," Raiffeisen Bank analyst Sergey Libin said.

 

Yandex will invest $100 million in the new venture and Uber will invest $225 million and receive a 36.6 percent stake. Yandex will control 59.3 percent and employees the remaining 4.1 percent, Reuters says.

 

The company will operate in 127 cities in Russia, Armenia, Azerbaijan, Belarus, Georgia and Kazakhstan, handling 35 million rides a month.

 

A unified platform after the merger will allow drivers to receive orders from both Yandex.Taxi and Uber apps, Yandex.Taxi chief executive Tigran Khudaverdyan said in a company statement. He will head the new, as yet unnamed company.  

 

Uber’s food delivery business UberEats will also be operated by the new company.

 

Khudaverdyan said the deal should be closed in the fourth quarter following regulatory approvals.

 

 

  • Uber’s entry in markets worldwide often faces backlash from local taxi companies and legal restrictions. In 2016, the company suspended its operations in Budapest after protests called on the government to impose the same rules on its drivers as apply to regular taxis.

 

  • Uber could face much tighter operating conditions in Europe if the EU follows a recommendation by Maciej Szpunar, a top legal adviser at the European Court of Justice. Szpunar dismissed Uber’s argument that it is only a technology company and said it should be regulated as a transport company, the Guardian reports.

 

  • Uber has faced a number of legal challenges by European cities and countries, and shut down its Danish operations last spring when new taxi laws took effect.

Compiled by Crystal Tai

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