Yandex.Taxi, Uber agree to merge businesses in Russia, Armenia and beyond

A man exits the Uber offices in Queens New York U.S

Uber will invest a total of $225 million into this new business and will own 36.6 percent of the company. In addition to its sizeable stake in the new venture, Uber will also hold three of the seven seats on the new company's board, but the company will be headed up by Tigran Khudaverdyan, who now serves as the chief executive of Yandex Taxi. Employees will own 4.1 percent of the company on a fully diluted basis.

For Yandex.Taxi, which is investing $100 million in the new company, the deal essentially vanquishes the threat of a major competitor. The company's CEO will be Tigran Khudaverdyan, who now runs Yandex's ride-hailing business.

The merger has not been finalized yet and is still subject to regulatory approval, but Uber expects the deal to close by Q4 of this year.

"This deal is a testament to our exceptional growth in the region and helps Uber continue to build a sustainable global business", said Pierre-Dimitri Gore-Coty, Uber's head in Europe, the Middle East and Africa. Uber's food delivery service, UberEATS, will also become part of the new venture.

For months, Uber has struggled with legal setbacks, accusations of a sexist work culture and driver protests, culminating in the June departure of co-founder and CEO Travis Kalanick under investor pressure. Yandex's service, Yandex.Taxi, also operates in Armenia and Georgia. The San Francisco based company is known for being aggressive in its approach to entering new global markets and will end the costly battle that the two firms have seen drag on for more than three years since the arrival of Uber in Russian Federation. Together, Uber and Yandex.Taxi may challenge that figure.

Following completion, passengers will be able to continue to use either Yandex or Uber apps. But it offers one vision for how companies like Uber can escape the vicious cycle of competing to subsidize rides in a money-losing race to the bottom.

After a long battle, Uber sold its subsidiary to the China-based Didi Chuxing and formed another new entity that operates in that region. The name of the new company is yet to be confirmed.

According to the report from Yandex, both Yandex.Taxi and Uber app will operate as before, driver apps, on the other hand, will be transitioned to a unified platform. The two companies will integrate the apps for drivers.

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