Uber Withdraws From Russian Market, Merges Local Operations With Yandex


Uber and Yandex, the “Google of Russia”, have agreed to merge their ride-sharing businesses in Russia and in five markets across Central Russia, a deal in which Uber cedes control of the market to the Moscow company after years of fierce competition. Diversified internet giant Yandex is the dominant player in Web search, maps and mobile navigation in the region.

The deal marks Uber’s second retreat from a major international market, and represents another pullback from Uber’s breakneck global expansion, coming one year after it sold its China operations to Didi Chuxing a year ago. While the deal will allow the cash burning company to improve its margins by ending the price wars in the Russian market, it will further cap its growth potential, having lost two of the world’s biggest markets. The deal also represents Uber’s biggest strategic move since the ousting of its controversial chief executive Travis Kalanick, who resigned last month after investor pressure and a string of crises at the $62.5bn company.

The quick details:

  • Uber will invest $225 million, Yandex putting $100 million into new, yet-to-be named venture, with Yandex emerging as the leading partner.
  • Uber will take a 36.6% stake worth $1.4 billion, Yandex will hold 59.3% in the pro forma company; The new business will be valued $3.725 billion.
  • Tigran Khudaverdyan, head of Yandex.Taxi in Russia, will become CEO of the combined company.
  • Uber and Yandex handle 35 million rides a month in Russia; new business to operate in Kazakhstan, Azerbaijan, Armenia, Belarus, Georgia
  • Deal expected to close in Q4 2017
  • The ownership stakes reflect how Yandex.Taxi is roughly twice the size of Uber in the region. As of June, Yandex.Taxi had an annual run rate of 285 million rides and gross bookings of $1.01 billion, while Uber had 134 million rides and $566 million in bookings, the companies said. Yandex.Taxi Chief Executive Tigran Khudaverdyan will become the CEO of the combined business and Yandex will consolidate the new company’s results in its financial statements. Yandex will hold four board seats, while Uber holds three, they said.

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