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Uber is Merging with Yandex in $3.7 Billion Russian Ride-Hailing Deal

On Thursday, ride-sharing giant Uber Technologies announced that it has agreed to merge its Russia business with tech company Yandex NV YNDX, better known as the “Google of Russia."

The deal will see Uber and Yandex.Taxi join forces in Russia, Armenia, Azerbaijan, Belarus, Georgia, and Kazakhstan, creating a new company that will operate ride-hailing cars in 127 cities. Uber will invest $255 million, taking a 36.6% stake in the new venture that is set to have a valuation at $3.73 billion. Yandex will invest $100 million and own 59.3% of the company; its shares, which trade on the New York Stock Exchange, are up over 16% in midday trading, and were up as much as 19% earlier today.

Yandex.Taxi’s Russian head Tigran Khudaverdyan will become CEO of the newly combined company, and together, the businesses handle around 35 million rides a month. Uber’s food delivery service, UberEATS, will also become part of the new venture. The deal is expected to close in the fourth quarter.

This move marks Uber’s second retreat from a major market, following its full departure from China last year. The company left the country in exchange for a 17.5% stake in its biggest Chinese rival Didi Chuxing; Uber lost over $2 billion in China battling Didi for dominance.

“This deal is a testament to our exceptional growth in the region and helps Uber continue to build a sustainable global business,” Pierre-Dimitri Gore-Coty, Uber’s chief for Europe, Middle East and Africa, said in the statement.

The merger with Yandex is part of Uber’s broader efforts to both cut losses and reshape its image after multiple scandals led to the resignation of co-founder Travis Kalanick as chief executive officer. In the first three months of this year, Uber reported a loss of $708 million, though this was an improvement from the $991 million loss in the prior year quarter.

According to Bloomberg, investors are also wondering if the Yandex.Taxi merger will lead to other ride-hailing market deals in the future. While Uber undoubtedly remains the number one operator in the U.S., it faces intense competition overseas, especially in India and Southeast Asia where Ola and Grab are preferred (also read: Who are Uber’s Biggest Competitors?).

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