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Uber admits defeat again, this time in Russian Federation

14 Juillet 2017

Yandex, a Russian tech giant with taxi operations, is taking over part of Uber's business, after the United States ride-hailing firm spent millions to build a presence in Russia and other countries in the region. Didi invested $1 billion into Uber (last valued at almost $70 billion) and Uber received a 17.7% stake in Didi in that deal, which valued the combined China operations at $35 billion. Now it covers 35 million trips each month across 127 cities, with the bulk of those coming from the Yandex.Taxi part of the JV; Uber was only in 21 cities. And the CEO of Yandex, Tigran Khudaverdyan, will be in charge of the combined business. The companies said that together they deliver over 35 million rides a month, with $130 million in gross bookings in June.

The deal heads off competition from Uber, which launched in Russian Federation in 2014. Yandex N.V. earned a news sentiment score of 0.27 on Accern's scale. The companies expect the deal to close in the fourth quarter of this year.

Last year, Uber realized it was outmatched in China, where the company spent billions of dollars in rider subsidies to gain a foothold against Didi Chuxing, the incumbent ride-hailing app there.

The executives of the Russian company said that while Uber has a deep bench of talented people, and the deal team changed over time, both Kalanick and Michael were involved in the deal. Finally, Financial Counselors Inc. boosted its position in shares of Yandex N.V.by 1.5% in the first quarter. According to the release from Uber and Yandex, "For the foreseeable future, the Uber and Yandex brands and rider apps will continue to operate, while the driver apps will be integrated after the transaction closes". The Company's divisions include Search and Portal, E-commerce, Taxi, Classifieds and Experimental businesses. Uber will have 37% ownership.

Uber is also going to use its UberEATS food delivery scheme in NewCo.

For now, the Yandex.Taxi app, available for download on iTunes and other app stores, works just like Uber or Lyft, allowing people to hail a ride.

Yandex N.V. (YNDX) reported earning per shares for the quarter ending Jul 27 BMO, whereas, 2 number of analysts estimated the mean EPS at 13.07.

Yandex has been called the "Google of Russia" and has its hands in a variety of online sectors-including mapping, which will give it an advantage in ride-sharing.

Like the China deal, this new agreement should help Uber stop burning through so much money. Lyft, the no. 2 ride-hailing service in the U.S., lost $600 million in 2016.

The implied valuation for Yandex.Taxi of about $2 billion in the deal with Uber is "substantially" higher than the levels expected by the market, BCS Global Markets said in note to clients Thursday.

Uber admits defeat again, this time in Russian Federation