Published: Fri, July 14, 2017
Money | By Armando Alvarado

Yandex Price 'Exaggerated' After Uber's Russia Deal

Yandex Price 'Exaggerated' After Uber's Russia Deal

The newly combined business, which the companies estimate could service more than 400 million rides this year, will operate in 127 cities across six countries, including Russia, Armenia, and Azerbaijan. "Together with the $225 million cash investment we are making in the new company-our 36.6 percent ownership stake will be worth nearly $1.4 billion".

"Together, we will continue to build a ride-sharing service that offers a viable alternative to automobile ownership or public transportation", Khudaverdyan said in a blog post. The new, unnamed company "will have the right to use Yandex.Taxi and Uber brands in the region", the companies said. Szpunar dismissed Uber's argument that it is only a technology company and said it should be regulated as a transport company, the Guardian reports.

Uber's head of operations in Africa, Middle East, and Europe Pierre-Dimitri Gore-Coty put up a fearless front in his statement.

Earlier, Uber had planned to open inter-regional headquarters in Kyiv, where the company will manage the operation of the service, not only in Ukraine, but also in Azerbaijan, Belarus and Kazakhstan. The sale to Didi Chuxing in the Middle Kingdom that cost Uber a reported $1 billion a year. That marks a sizeable gain on the $170 million Uber invested since entering the region three-and-a-half years ago, even with the new $225 million investment.

In August previous year, Uber sold its China business to domestic rival Didi Chuxing in exchange for a 17.5% stake in Didi, then valued at $35bn.

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While Uber no longer exists in China, the paper value of its stake in Didi has risen to around $8 billion from $6.1 billion, based on Didi's recent funding round valued at $50 billion.

Uber said in May its net loss, excluding employee stock options and other items, narrowed in the first quarter to $708 million from $991 million in the fourth quarter.

Tigran Khudaverdyan, the CEO of Yandex.Taxi, will head the new combined business, with Yandex holding four board seats and Uber holding three. Uber expects its losses to shrink further in the second quarter. Uber continues to own 17.5 percent of that business.

Yandex and Uber compete in Russian Federation with rivals including Fasten-owned Rutaxi and Saturn, Maxim and Gett, the Israeli startup backed by German automaker Volkswagen. Uber does not now operate in Armenia or Georgia. The company is still the leading taxi hailing app in the United States but following the setback in China and continued losses in India, the withdrawal from Russian Federation looks like a body blow. The driver apps of the two companies will be integrated into a single app for greater efficiency, the companies said.

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