Uber, the developers, marketers, and operators of the car transportation and food delivery service, has announced that it will be forming a partnership with Yandex, who runs the largest search engine in Russia and operates a similar car transportation service, Yandex Taxi. In a joint statement, they announced they would be conjoining their ride-sharing business, with the addition of Uber EATS food delivery, to operate in Russia, Armenia, Azerbaijan, Belarus, Georgia and Kazakhstan, totaling to 127 cities in a yet-to-be-announced company. The two companies together predict that they will be offering 35 million rides per month across these countries.
The deal with be valued at $3.72 billion with Yandex being the leading partner. It is agreed upon that Uber will invest $225 million while Yandex will invest $100 million of its own money. Yandex will hold a 59.3% percent stake while Uber will own 36.6% of the company and employees will have a 4.1% stake. Tigran Khudaverdyan, the chief executive of Yandex.Taxi, will become the CEO of this new venture and Yandex will also be in charge of financial statements. It is also announced that Yandex will hold four board seats while Uber will be holding three.
Today, Yandex N.V. (NASDAQ: YNDX) opened at $32.26, surging 19% and up over $4 as this transaction eliminates one of Yandex’s most aggressive competitors. Unfortunately, for Uber, this marks another setback in their goal of global expansion. Last year, Uber also had to leave China when they sold their operations to rival, Didi Chuxing, for 17.5% stake of their company. This deal is expected to close in the fourth quarter.