Yandex, the NASDAQ-listed Russian search giant, and Uber announced today the completion of the merger of their respective ride-sharing and food delivery businesses in Russia and neighboring countries.
The deal, announced in July last year, was approved by the Russian antimonopoly authority in November.
At closing, Uber invested $225 million and Yandex invested $100 million in cash in the combined company, the valuation of which exceeds $3.8 billion on a post money basis, according to Yandex’s press release.
The combined business has more than $400 million in cash on hand at closing. It is now held approximately 59.3% by Yandex, 36.9% by Uber, and 3.8% by employees of the group on a fully diluted basis.
Yandex also indicated that Tigran Khudaverdyan, ex-CEO of Yandex.Taxi, has become the CEO of the combined business. The members of the supervisory board include, from Yandex’s side, John Boynton, Chairman of the Board of Yandex N.V.; Arkady Volozh, its co-founder and CEO; Greg Abovsky, its COO and CFO; and Vadim Marchuk, its Vice President, Corporate Development; as well, on Uber’s side, as Cameron Poetzscher, Uber’s VP of Corporate Development, Pierre-Dimitri Gore-Coty, its VP and Regional General Manager, EMEA, and Michelle DeBella, its Global Head of Internal Audit.
In a practical perspective for end users, the Yandex.Taxi and the Uber apps will operate as before. Users of both apps will enjoy “seamless global roaming” across the two platforms: for example, “an Uber user arriving in Moscow from Paris will be able to order a Yandex.Taxi straight from their Uber app,” according to Yandex.
The deal may appear as Uber’s second retreat from a major market globally, as the US giant needs to improve revenue and narrow losses. In 2016, Uber left China in exchange for a 17.5% stake in rival Didi Chuxing, after losing more than $2 billion battling its competitor.
A competitive market
The size of the Russian taxi market is subject to various estimates, from $3-4 billion (Gett), to more than $8.4 billion in 2016 (VTB Capital data cited by Yandex). Informal rides by “gypsy cabs” account for an additional volume of some $1.9 billion, believe government experts cited by Yandex.
Uber arrived in Russia in 2013, but began developing there actively only in 2015. While visiting Moscow two years later, its Vice President Ryan Graves underlined the importance of Russia in Uber’s strategy.
Yandex.Taxi was not the only competitor of the US giant on the Russian market. Gett, a global player launched in Israel in 2011, covered nearly 70 Russian cities as of late 2016.
In September 2016, the company announced a $100 million investment plan until the end of 2017 to cover new Russian cities, aiming to control 50% of the Russian market. Two months later, the company received a $100 million loan facility from Sberbank — which is a partner of Uber and even one of its shareholders via Sberbank’s venture arm SBT Venture Capital.
A new entrant in the market is MTS, one of Russia’s leading mobile operators.
Traditional taxi booking services should be mentioned too. Maxim, a leading player, operates in more than 130 Russian cities, according to media reports.
