Uber announced on Thursday (13 July) that it has formed a partnership with rival Yandex, dubbed the "Google of Russia", to merge their ride-hailing businesses and create a new, yet- unnamed venture. The deal comes three years after Uber officially launched in Moscow.
The San Francisco-based company exited from China last year, signalling another retreat in its breakneck expansion across the globe.
Russian Internet search engine leader Yandex, which also offers mapping services and runs a ride-hailing service, Yandex.Taxi, said the new company will serve markets in Russia, Armenia, Azerbaijan, Belarus, Georgia and Kazakhstan and operate in 127 cities. Uber does not currently operate in Armenia and Georgia.
Uber has agreed to invest $225m (£174m) and take a 36.6% stake in the new, joint company that will be valued at about $3.7bn. Yandex will invest $100m and own 59.3% of the new venture. Employees of the new company will own the remaining 4.1% stake.
Under the deal, Uber will contribute its ride-hailing and UberEats operations in those countries while Yandex contribute its Yandex.Taxi operations.
"The new company's goal will be to serve the needs of riders, drivers and cities as we develop a fast-growing, sustainable ridesharing, food delivery and logistics business in the region", Pierre-Dimitri Gore-Coty, head of Uber's business in Europe, the Middle East and Africa said in an email to Uber employees. "Combining Yandex's local expertise in search, maps and navigation with our leading global experience in ridesharing will enable us to build the best local services and provide a credible alternative to car ownership across the region."
Tigran Khudaverdyan, the CEO of Yandex.Taxi, will head the new combined business, with Yandex holding four board seats and Uber holding three.
The deal is expected to close in the fourth quarter of this year pending regulatory approval. The Uber and Yandex brands and rider apps will continue to operate as usual which the driver apps will be integrated after the deal closes.
In August last year, Uber sold its China business to domestic rival Didi Chuxing in exchange for a 17.5% stake in Didi, then valued at $35bn.
The move comes during a troubled time for Uber as it reels from months of controversies including harassment and sexism allegations that led to an investigation, a high-stakes lawsuit with Google's Waymo, revelations of secretive tools to deceive law enforcement and rivals as well as a slew of departures.
The whirlwind of scandals eventually led to Uber founder Travis Kalanick's resignation last month.
"Combining our business with Yandex will give us a very significant stake in a new company which will initially serve more than 35 million trips each month and operate in an incredible 127 cities in six countries across the region", Gore-Coty said. "Together with the $225 million cash investment we are making in the new company—our 36.6 percent ownership stake will be worth almost $1.4 billion.
"This deal is a testament to our exceptional growth in the region and helps Uber continue to build a sustainable global business."