Uber merges with Chinese rival, Didi Chuxing

August 1, 2016

Tesla isn't the only company with an urge to merge today: ride-sharing powerhouse Uber plans to merge its operations in China with the market-dominating Didi Chuxing.

Details of the plan came from Didi Chuxing, which will own Uber's brand and data in China. Under the terms of the merger, Uber China and its investors will receive a 20 percent stake in the new company, and the CEOs of each company will join the other's board of directors.

News of the merger isn't especially surprising. Uber has had a very tough time gaining traction in China, where it recently announced plans to facilitate a wide range of transportation for travelers. Since arriving in the country, it's lost about $2 billion trying to gain market share.

Didi Chuxing, on the other hand, is a Chinese brand that has continued to grow, gobbling up competitors and recently scoring a $1 billion investment from none other than Apple. Today, Didi Chuxing owns roughly 87 percent of the private car service market in its home country.

That said, it's not as if Uber is walking away from China a loser. The value of the new, merged company is estimated to be around $35 billion. So, in exchange for the $2 billion it's spent to date in China, Uber is earning a stake in the new company worth roughly $7 billion. Not too shabby.

Reports suggest that, at least for the time-being, Didi Chuxing will continue using the Uber brand, which be helpful in securing business from foreign travelers used to using Uber. However, we'd be surprised if drivers for Uber China didn't work on the same ride-hailing network as their peers at Didi Chuxing.

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