Uber has sold its Uber China wing to competitor Didi Chuxing to become a 20% stakeholder in the merged operation. The newly merged company has a net worth of $35 Billion in which Uber has a $7billion stake.
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Both the companies were unable to churn a profit despite investing billions into their operations in China. The merger had been in talks for quite a while. The timings of the announcement however follows on the heels of China legalizing ride hailing apps nationwide.
It seems as if Apple is now financially tied to Uber as it recently acquired a large chunk of Didi Chuxing. Didi will put $1 Billion into Uber giving the US based company a net value of $68 Billion but will run the acquired company under its own brand name.
Uber usually earns high profits from most of its market but has lost $2 Billion in the case of China. According Uber CEO Travis Kalanick. "Getting to profitability is the only way to build a sustainable business that can best serve Chinese riders, drivers and cities over the long term.”
The sale of the Chinese wing has come as good news for Uber's private equity investors as the company is finally able to become a public company post the launch of an IPO. Didi has confirmed the news of the merges so it seems like a done deal.