Uber Technologies announced today that the company will be merging its Russian arm with Yandex.Taxi, the leading ride-hailing service in Russia. As part of the deal, which is yet to clear regulatory hurdles, Uber will be investing $225 million cash, take three out of seven seats in the new company’s board and walk away with 36.6% ownership worth almost $1.4 billion.
In the last twelve months, Uber has been streamlining its overseas business, which have proved to be costly affairs due to competition from local players. In August 2016, Uber sold its China operations to Didi Chuxing, a Chinese ride-sharing company, and took a 20% share of the Chinese company along with a single seat on the board.
Things were never easy in foreign lands. Uber had to fight regulations on the one side, face angry protests from local taxi unions, and offer deep discounts and promotions in search of market share. With the company operating in more than 80 countries around the world, the fight possibly became too much for the company.
The losses Uber was taking to win market share were unsustainable. But the same goes for its erstwhile chief rival. Didi Chuxing had become the dominant Chinese player in the space. But neither company could afford the high level of subsidies (and resulting costs from driver corruption) needed to win new drivers and riders and new markets. – HBR
But raising funds has never been a problem for Uber, as the company raised $3.5 Billion from Saudi Arabia’s Public Investment Fund in June 2016, and another $1.5 billion in Debt from Morgan Stanley in July 2016. Uber, which raised funds regularly in 2015 and 2016, raised an undisclosed amount from German Investor Axel Springer this year, the only fundraising activity this year according to Crunchbase.
Uber is definitely burning through cash, but the company hasn’t been as actively raising money as it used to in the last two years, and it is slowly moving away from costly overseas wars and taking the safer route by merging with competitors and taking a stake in the combined entity.
They did it in China last year and now they have done the same in Russia, and let’s not forget how quickly they decided to go for a new CEO instead of sticking to Travis Kalanick as the company desperately tries to improve its image after multiple lawsuits and questions about its corporate culture kept damaging the company.
All these decisions clearly point to one thing for us – UBER is closer than ever to an IPO.
Thanks for visiting! Would you do us a favor? If you think it’s worth a few seconds, please like our Facebook page and follow us on Twitter. It would mean a lot to us.
Source: Yandex.Taxi/Uber
