Uber and Yandex agree to combine ride-sharing businesses in Russia

Uber and Yandex (the Google of Russia) have announced that they will be combining their ride-sharing businesses in Russia and will extend to five nearby markets namely Azerbaijan, Belarus, Kazakhstan, Armenia and Georgia.

Yandex will contribute $100 million into a new joint company in which Yandex will own 59.3 percent and employees will have a 4.1 percent stake. Yandex will have four seats on the new company’s board

Uber will have the remaining three of the seven seats on the new company’s board. It is also putting down $225 million cash investment in the new company. Its 36.6 percent ownership stake will be worth almost $1.4 billion.

Over the last three years Uber has invested around $170 million to build and expand its business to 21 cities in these countries.

Combining business with Yandex will give Uber 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.

Yandex.Taxi Chief Executive Tigran Khudaverdyan will become the CEO of the combined company.

Uber will contribute its UberEATS food delivery business in the six-country region to the new venture.

“There is ride-sharing and food delivery and beyond that there are also numerous opportunities in logistics that we will explore,” Yandex Chief Financial Officer Greg Abovsky said on an investor call. Abovsky added the combined company could be spun off with a separate stock listing in a few years.

“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,” says Pierre-Dimitri Gore-Coty, head of Uber’s business in Europe, the Middle East and Africa in an email to his team.

“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.”

Last year, Uber merged with its rival, Didi Chuxing, in China instead of losing money competing.

The deal is expected to close in the fourth quarter.