Uber Technologies Inc is handing over the keys to its business in Russian Federation.
The Russian search giant, which also has a taxi business, will claim majority ownership, and Tigran Khudaverdyan, the chief executive of Yandex's taxi operations, will lead the new company.
San Francisco-based Uber has agreed to invest $225 million while Yandex has agreed to invest $100 million into a new joint company in which Yandex will own 59.3 per cent, Uber hold 36.6 per cent and employees having a 4.1 per cent stake. It allows Uber to strike a deal.
After losing $2bn in China, Uber merged its business with rival Didi Chuxing in a $35bn deal a year ago. The agreement with Yandex is part of Uber's renewed effort to improve revenue, narrow losses and resolve its legal issues.
Pierre-Dimitri Gore-Coty, Uber's boss in Europe, the Middle East and Africa, said the company's share of the new firm will be worth almost US$1.4bn and it will have three of the seven seats on the board. The deal is expected to be completed by the end of the year but it marks an end of an era for the company, as it were.
"This deal is a testament to our exceptional growth in the region and helps Uber continue to build a sustainable global business". Under their watch, the company inked an armistice with Didi a year ago, partnerships with automakers Daimler AG and Toyota Motor Corp, and with credit card companies including American Express Co.
Former Uber CEO Travis Kalanick, who initially filed for a leave of absence but then later chose to resign to accommodate the requests of shareholders, helped negotiate the deal with Yandex alongside former Uber senior VP of business Emil Michael. In the first quarter of this year, Uber reported more than $700 million in losses. This week, it told investors that losses continued to decline in the second quarter, a source familiar with the report said.
Khudaverdyan said users will have "seamless" global roaming across the Uber and Yandex.Taxi platforms.
Uber will contribute its UberEATS food delivery business in the six-country region to the new venture. In 2016, the company suspended its operations in Budapest after protests called on the government to impose the same rules on its drivers as apply to regular taxis.
"We are definitely ready to work with companies".
Otkritie brokerage analyst Timur Nigmatullin estimated that, before the deal, Yandex.Taxi represented around 20 per cent of the parent company's market capitalisation.
Yandex said the joint company was worth $3.725 billion.
"The effective elimination of Yandex's most unsafe competitor represents the key upside surprise, while it should also point to an easier and shorter path to profitability", BCS said.