Uber admits defeat in China as it sells business to rival Didi
$35bn deal will see Uber investors gain a 20% stake in Chinese ride-hailing firm
- Battle between the two companies has been costly as both sides fought for market share
- Uber China has failed to make a profit since its introduction in 2014
Updated : 09:55
Uber has finally put to an end the battle between its Chinese operations and main rival Didi Chuxing, agreeing to a $35bn deal for the sale of its business in the country, as confirmed by Bloomberg.
In the deal, China's biggest ride-hailing service will acquire all of Uber China's business in the region, and provide investors with a 20% stake in the new company.
Pressure had been coming on Uber to resolve the competition battle as billions of dollars were being spent to try to win more market share against Didi, with investors in the US-based company increasingly viewing it as an unwinnable contest.
In May Didi claimed to have 87% of the market share in China, and has also invested in Uber's US competitor Lyft.
Both companies were engaging in mass fundraising in order to increase their market share, with Didi collecting $7bn in debt and equity in June, while Uber were able to raise $3.5bn from a Saudi sovereign wealth fund.
The complex arrangement includes a $1bn investment from Didi towards its US rival, according to Bloomberg.
In a blog post released to the financial news website, Uber CEO Travis Kalanick said that he believed it was the right decision.
“As an entrepreneur, I’ve learned that being successful is about listening to your head as well as following your heart," confessed Kalanick. "I have no doubt that Uber China and Didi Chuxing will be stronger together.”
The Chinese firm was created after a similar merger deal between Didi and former competitor Kuaidi, allowing it to have the biggest market share for the business.