Uber and Didi Chuxing had been locked into a fierce battle to attain dominance of Chinese Taxi market. The challenge that both the companies faced was, how to turn profitable within competing with each other. Both the companies were burning VC cash to grab the market share. Finally, better sense has prevailed and both the companies have decided to merge under a single banner in China.

Uber has decided to merge with Didi Chuxing. Effectively, this means Didi Chuxing will have access to Uber’s data, business intelligence and brand in China. Below are some high level details about the deal:

  • Uber’s China business valuation is $7 billion.
  • Didi Chuxing’s Valuation for the last round was $28 billion.
  • The combined entity of Uber China + Didi Chuxing valuation would be $35 billion, with Uber having 20% stake in the joint-entity.

An year ago, Didi Chuxing itself was formed by the merger of Didi and Kuaidi, two local companies.  Uber CEO Travis Kalanick mentioned “As an entrepreneur, I’ve learned that being successful is about listening to your head as well as following your heart. Uber and Didi Chuxing are investing billions of dollars in China and both companies have yet to turn a profit there. 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”.

Uber is competing with Grab in South-East Asia, Ola in India and Lyft in US. Didi Chuxing has investments in Ola, Grab and Lyft. It remains to be seen how Didi Chuxing will manage it’s relationship with Ola, Grab and Lyft.