Uber cedes Russia to Yandex with $3.7 billion merger deal

Uber is handing over the keys to its business in Russia.

The San Francisco-based company and Yandex are merging their ride-hailing businesses in Russia. Uber will invest $225 million and take a 36.6 per cent stake in a new, yet-to-be named venture that will be valued at $3.73 billion, the companies said in a statement Thursday.

The deal with Yandex is Uber’s second retreat from a major market. Last year, Uber left China in exchange for a 17.5 per cent stake in rival Didi Chuxing, after losing more than $2 billion battling its competitor.

While Uber remains the dominant ride-hailing operator in the U.S., it has been on the defensive, beset by scandals that led to Travis Kalanick’s ouster as chief executive officer. The agreement with Yandex is part of Uber’s renewed effort to improve revenue, narrow losses and resolve its legal issues.

“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.

Tigran Khudaverdyan, head of Yandex.Taxi in Russia, will become CEO of the combined enterprise, Uber and Yandex said. Together, their businesses handle 35 million rides a month, and will also operate in Kazakhstan, Azerbaijan, Armenia, Belarus and Georgia. The deal is expected to close in the last three months of 2017.

Uber’s exit from Russia could be a precursor to more deals in other big, fiercely competitive ride-hailing markets. Investors have raised questions as recently as this month about Uber’s continued losses in India and Southeast Asia.

They have asked privately whether the company would be better served by cutting deals with market leaders Ola and Grab, two people familiar with the matter said.