All you wanted to know about the fate of Didi-Uber deal

China Daily (USA) - - BUSINESS - By MENG JING mengjing@chi­nadaily.com.cn

Last week’s truce — merger, if you will— be­tween ri­val dis­count cab ride apps Didi Chux­ing and Uber China fol­lowed years of fierce com­pe­ti­tion. Here is the low-down on the pro­posed deal.

How will the rev­enue and vot­ing rights be split in the com­bined Didi-Uber en­tity?

Uber Global will re­ceive a 5.89 per­cent stake in the com­bined com­pany along with “pre­ferred eq­uity in­ter­est”, which is equal to a 17.7 per­cent stake. Uber China’s in­vestors, in­clud­ing Baidu Inc, will re­ceive a 2.3 per­cent stake in the merged en­tity. Didi founder Cheng Wei and Uber Chief Ex­ec­u­tive Of­fi­cer Travis Kalan­ick will join each other’s boards.

What will hap­pen to the Uber China app?

Didi will take con­trol of Uber China’s brand, busi­nesses, data and other as­sets in the coun­try af­ter the pro­posed merger. But Didi and Uber will re­main two sep­a­rate brands. In other words, the two apps will con­tinue to run in­de­pen­dently in China.

What will hap­pen to Uber China em­ploy­ees?

Didi said in a pre­vi­ous in­ter­view that it would wel­come Uber China em­ploy­ees to join its team. Uber was said to have of­fered a Close Bonus in cash to its China team. The bonus will be val­ued at six months’ base salary and six months’ eq­uity vest­ing that in­cludes new hire grants, per­for­mance bonus and re­fer­ral bonus, ac­cord­ing to the re­leased de­tails of a re­cent in­ter­nal meet­ing at Uber China. The com­pany said half of the bonus will be paid in cash within one week af­ter the merger is com­pleted. The re­main­ing half will be paid to em­ploy­ees one month af­ter the merger. Only em­ploy­ees who have worked with Didi or Uber for at least30 days af­ter the sign­ing of the deal are qual­i­fied to re­ceive the sec­ond half of the bonus.

Will the post-merger trip fares rise?

Didi said in a state­ment that it will con­tinue to of­fer in­cen­tives to pas­sen­gers and driv­ers for a sig­nif­i­cantly long pe­riod. It will make “im­prov­ing users’ ex­pe­ri­ence” one of its top pri­or­i­ties in fu­ture. How­ever, many an­a­lysts said the main rea­son be­hind the Didi-Uber mar­riage was that in­vestors of both com­pa­nies wanted the firms to stop their un­sus­tain­able cash burn in China.

What is the Chi­nese gov­ern­ment’s stand on the pro­posed merger?

The Min­istry of Com­merce said on Tues­day it has not re­ceived a busi­ness dec­la­ra­tion from Didi and Uber about their pro­posed deal. All busi­nesses with large-scale op­er­a­tions, whose merger may re­sult in a mo­nop­oly, must sub­mit a busi­ness dec­la­ra­tion to the Min­istry of Com­merce as well as wait for

an an­titrust in­ves­ti­ga­tion. Com­pa­nies with­out such clear­ance will not be al­lowed to carry out merg­ers and ac­qui­si­tions in China. How­ever, in­dus­try ob­servers said it will be very dif­fi­cult to es­ti­mate the size of the merged Didi-Uber en­tity’s busi­ness. Nei­ther Didi nor Uber China has earned a profit yet.

Has the Chi­nese gov­ern­ment re­jected any such merger pro­posal in the past?

No. But then again, the Didi-Uber merger pro­posal is not ex­actly com­pa­ra­ble with other in­dus­tries or busi­nesses. Both play­ers are likely to im­press upon the gov­ern­ment that their pro­posed merger would merely com­bine their op­er­a­tions to of­fer a bet­ter ser­vice to ci­ti­zens, that it does not really pose a threat to other ex­ist­ing play­ers, and that it does not really make ma­te­rial dif­fer­ence to ve­hi­cle own­ers and driv­ers. More­over, both firms are likely to stress that they are not yet prof­itable, and the merger would im­prove lo­gis­tics and help stream­line the nascent cab­hail­ing sec­tor.

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