Moscow. On February 7..Taxi and Uber closed a deal to combine services, Yandex said in a statement.
At closing Uber deals and Yandex invested $225 million and $100 million respectively in the new company, taking into account these investments cash The company's balance sheet is $400 million.
Yandex notes that as a result, the joint business is valued at more than $3.8 billion. Previously, the company gave a valuation of $3.7 billion.
Under the terms of the deal, about 59.3% of the joint venture belongs to Yandex, 36.9% to Uber, and another 3.8% to employees.
Tigran Khudaverdyan, who previously headed Yandex.Taxi, became the general director of the new company. The board of directors included four representatives from Yandex: the chairman of the board of directors of Yandex N.V. John Boynton, Chairman and Founder Arkady Volozh, Chief Operating and Financial Officer Greg Abovsky and Vice President of corporate development Vadim Marchuk. From Uber's side, the board of directors included three representatives: Vice President of Corporate Development Cameron Poetscher, head of the company in the Europe, Middle East and Africa region Pierre-Dimitri Gore-Coty and head of the international division internal audit Michelle DeBella.
Yandex and Uber agreed to combine online ride-hailing businesses in Russia, Azerbaijan, Armenia, Belarus, Georgia and Kazakhstan as part of a new company in July 2017. Federal Antimonopoly Service deal between Yandex and Uber in November.
After the deal is closed, both applications for ordering rides - Yandex.Taxi and Uber - will continue to be available to users. At the same time, taxi companies and drivers will switch to a single technology platform. Together with the taxi service, the joint business will develop food delivery. Previously, Yandex.Taxi established a subsidiary company, Yandex.Eda LLC, which will include the recently acquired Foodfox and UberEATS businesses.
After the merger, Yandex.Taxi and Uber may attract third-party investors to the joint venture, including through an IPO. As Yandex CFO Greg Abovsky told Bloomberg, the placement could take place in the first half of 2019, most likely in the United States. Yandex itself was listed on Nasdaq, having completed a deal worth $1.4 billion in May 2011.
Meanwhile the head Russian Fund direct investment Kirill Dmitriev at the World Economic Forum in Davos that the fund, together with partners, plans to invest tens of millions of dollars in the joint venture of Yandex.Taxi and Uber. “We are planning our investment in the combined business of Uber and Yandex.Taxi. We hope that the deal will close in the near future. A number of our partners will come there with us, including RCIF (Russian-Chinese Fund - IF), and, accordingly, , we believe in the future of this company,” Dmitriev said.
The combined company of Yandex and Uber will likely slightly reduce its expenses on discounts in Moscow, but these funds will be redirected to other regions in emerging markets, says a financial analyst at Otkritie Broker. Timur Nigmatullin.
Merger of Yandex and Uber
Yandex and Uber have agreed to merge businesses for online taxi ordering in Russia, Azerbaijan, Armenia, Belarus, Georgia and Kazakhstan. The combined company is valued at more than $3.5 billion and will provide about 35 million rides per month. At the same time, both applications for ordering rides will continue to be available to users, but all taxi companies and drivers will move to a single technology platform.
“The taxi market, most likely, will not react in any way to the agreement, that is, the growth rate of the online taxi ordering market will continue and remain high. But due to the reduction in direct competition, companies will be able to invest slightly less in Yandex and Uber in their aggressive expansion into new markets. It turns out that high growth rates will continue with less investment.
The deal, of course, is very positive for Yandex, of which taxi services now account for almost half of its structure. Search no longer dominates other business segments, but at least from the point of view of assessing its value. But the agreement also contains risks for Russian company. The merged company will use a roaming mechanism, which in theory could either slow down Yandex’s expansion into the global market or even limit such opportunities,” comments FBA "Economy Today" Analyst at Otkritie Broker.
Tariffs in Yandex and Uber
Yandex shares immediately reacted to the news of the merger, updating their shares, showing an increase of more than 17%. In the new company, “Yandex will receive a share of 59.3%, and Uber will have 36.6%. Will head the company CEO"Yandex.Taxi" Tigran Khudaverdyan. As for prices for taxi services, while the process of approval is underway with regulatory authorities, it is too early to talk about prices, Uber noted, adding that there is no talk of monopolizing the market.
“The online ordering market itself today constitutes a small share of the legal taxi market – about 10%. Nothing fundamentally changes in terms of the legal taxi market. But taking into account future changes in the expansion strategy, the market share of online orders will continue to grow at a faster pace, while companies will not need to raise additional financing to cover the costs of a business that remains unprofitable. The level of unprofitability will decline due to decreased competition.
As for tariffs, Yandex and Uber are likely to somewhat reduce the intensity of discounts in established markets, primarily in the Moscow region. This rebate spending, which has been common due to competition between them, will be redirected to developing regions. Roughly speaking, in Moscow there will be fewer discounts and fares will rise, but in other regions their number will increase in different categories, and travel will become more accessible,” sums up Timur Nigmatullin.
07/13/2017, Thu, 13:32, Moscow time, Text: Igor Korolev
Yandex has agreed to merge its taxi service with Uber. The merged company will be under the control of Yandex, and $325 million will be invested in it.
Yandex creates a joint venture with Uber
The Yandex company has agreed to merge the Yandex.Taxi service with Uber. The partnership will work in Russia, as well as in Armenia, Azerbaijan, Belarus, Georgia and Kazakhstan.
Uber will invest $225 million in the merged company, Yandex - $100 million. Control in the new structure will belong to Yandex - it will have 59.3%. Uber will own 36.6% of the shares. Another 4.1% will belong to the company's employees.
What will the merged company be like?
The combined company will be headed by the CEO of Yandex.Taxi Tigran Khudaverdyan. According to the press release, new company will use Yandex technologies and knowledge in the field of mapping and navigation services and search engines and Uber's global experience as the global leader in online ride-hailing services.
This will create an even more dynamic and sustainable business that meets all the needs of users and drivers, and also helps the development of transport infrastructure cities and regions.
In the combined taxi of Yandex and Uber, Yandex will receive a controlling stake
After the deal is closed, both ride ordering applications, Yandex.Taxi and Uber, will continue to be available to users. At the same time, taxi companies and drivers will switch to a single technology platform. As stated in the press release, this will increase the number of cars available for fulfilling orders, reduce the delivery time, reduce idle mileage, and increase the reliability and availability of the service as a whole.
The transaction is expected to be completed in the fourth quarter of 2017. As part of the agreement, Yandex.Taxi agreed on roaming with Uber. Now tourists from Russia will be able to call a taxi abroad using the Yandex.Taxi application, and tourists from abroad will have access to cars from Yandex.Taxi using the Uber application. UberEats, a food delivery service launched by Uber, will also be part of the partnership.
Chinese version
Interestingly, a year earlier, in August 2016, Uber made a move in China by allowing itself to be swallowed up by local taxi startup Didi Chuxing.
Didi Chuxing is the largest taxi service in China, headquartered in Beijing. According to Reuters, the service’s share of the taxi ordering market in China is 55%. Uber co-founder Travis Kalanick(Travis Kalanick) in 2016 estimated his company's share in the Chinese market at 30-35%.
The value of the combined venture between Uber and Didi Chuxing was expected to be about $35 billion. Uber China investors received a 20% stake in Didi. After the deal, the Uber brand itself continued its presence in the Chinese market, and Didi Chuxing was supposed to invest $1 billion in the development of Uber in the United States.
Taxi market estimates
According to VTB Capital estimates, the market for legal taxi transportation in Russia in 2016 amounted to 501 billion rubles. At the same time, according to estimates Analytical Center under the government, the “gray” taxi market amounted to 116 billion rubles. Thus, the share of the combined company in terms of revenue in 2016 would have been 5-6% of the entire market.
Possible reasons for the merger
A source in the taxi market sees several reasons for the merger of Uber with Yandex.Taxi. “Essentially, Uber invented the bomb market for the European Union and the United States, but in Russia it existed for years. In addition, in Russia Uber has to deal with various problems: claims from FAS and Roskomnadzor, requirements to work exclusively with licensed drivers, etc. For this reason, it was not easy for Uber to operate in Russia.”
Due to the news about the merger of taxi services Yandex and Uber, Yandex shares reached a historical high
In addition, partners need to join forces to promote in the regions. In Moscow, Yandex.Taxi is the leader in the number of trips, Gett is in second place, and Uber is in third place. At the same time, in the country as a whole, the leaders are the services Maxim, Vezet and Rutaxi, notes the CNews interlocutor.
The combined company will have access to combined capital, which will allow it to strengthen its marketing efforts and offer various digital services. But whether tariffs will be reduced is a question, because such a step will require support from the drivers themselves, adds the publication’s interlocutor. Yandex did not comment on the issue of changes in tariff policy.
Yandex shares reached a historical high
Immediately after the announcement of the creation of a joint company with Uber, Yandex shares began to rise in price.
By 14:00 Moscow time on July 13, 2017, their growth was 18%, and the price reached $27.72 on the Nasdaq exchange and 1.95 thousand rubles. on the Moscow Exchange, which, as Vesti.Ekonomika reports, became a historical maximum share price in the history of the company.
Towards evening, trading in Yandex shares on the Moscow Exchange was transferred to special regime due to growth of more than 20%. Shares of Yandex N.V. on the Nasdaq exchange in New York increased by almost 16.5% compared to the previous reporting period and traded at $31.83 per share. At the same time, the growth in stock quotes reached 18.7%, TASS notes.
Uber and Yandex announced the closing of a deal to merge taxi call services. As a result, the association will be managed by the head of Yandex.Taxi, Tigran Khudaverdyan. The board of directors of the resulting company is headed by three representatives from Uber and four from Yandex. The company announced this idea in advance - back in July 2017. The services have merged in Russia, Kazakhstan, Georgia, Azerbaijan, Armenia and Belarus.
Managers promise that travel prices will remain the same. As before, there will be two applications, but now they will have common drivers and taxi companies. Along with taxis, the joint company will also engage in food delivery. Yandex.Taxi has established a subsidiary company, Yandex.Eda, which will include the recently acquired Foodfox and UberEATS services.
We quote the official statement: “At the time of closing of the transaction, Uber and Yandex invested respectively 225 million and 100 million US dollars in the new company. With these investments, the company has $400 million in cash on its balance sheet. Thus, it is valued at more than US$3.8 billion. About 59.3% of the company is owned by Yandex, 36.9% by Uber, and 3.8% by employees.”
Uber and responsibility
It is also curious that Uber sent letters to all customers by email about changes in the provision of their services, in which, in fact, it abdicated all responsibility for carriers. “You acknowledge that Uber does not provide transportation or logistics services and does not act as transport company, and that such services are provided by third party contractors.<…>Uber does not guarantee the quality, suitability, safety or capabilities of third party providers. You agree to bear all risks associated with the use of the services solely and to the maximum extent permitted by law. The Company shall not be liable for indirect, incidental, incidental, special, punitive or consequential damages, including lost profits, lost data, personal injury or property damage, in connection with the services, even if the Company has been advised of the possibility of such damages.”
Yandex and Uber are merging their online taxi ordering businesses.
Two major players in the taxi services market, Yandex and Uber, signed an agreement to combine businesses for online ride ordering in Russia, Azerbaijan, Armenia, Belarus, Georgia and Kazakhstan as part of a new company. Gazeta.Ru was informed about this by the press services of both services. The deal has already been approved by the boards of directors of Uber and Yandex and is expected to be closed in the fourth quarter of 2017 after approvals from regulatory authorities. Participants in the deal collectively provide more than 35 million trips per month.
The combined company is valued at $3.725 billion - Uber and Yandex will invest $225 million and $100 million in it, respectively.
Taking into account these investments and possible adjustments at the time of closing the transaction, 59.3% of the company will belong to Yandex, 36.6% to Uber, 4.1% to employees. The company will be headed by Yandex.Taxi CEO Tigran Khudaverdyan.
“The new company will leverage Yandex’s technology and expertise in mapping, navigation services and search engines and Uber’s experience as the world leader in online ride-hailing services,” Uber said in a press release. “This will create an even more dynamic and sustainable business that meets all the needs of users and drivers, and also helps develop the transport infrastructure of cities and regions.”
As representatives of the services assure, after the deal is closed, both applications for ordering rides - Yandex.Taxi and Uber - will continue to be available to users.
That is, on mobile devices there will be two separate applications for services. “At the same time, taxi companies and drivers will switch to a single technological platform, which will increase the number of cars available for fulfilling orders, reduce the delivery time, reduce idle mileage, and increase the reliability and availability of the service as a whole,” Uber noted.
As the press service of Uber told Gazeta.Ru, the planned transaction does not mean the purchase of the company by Yandex. “This is precisely the merger, we will have three seats on the board of directors out of seven, we will be able to take part in making strategic decisions,” the company emphasized.
At the same time, Uber refused to comment on pricing policy and competition within applications, as well as the question of whether the Moscow Department of Transport’s claims to provide tracking of users’ trips will be transferred to the new organization.
“We cannot say how prices will differ in the applications while the regulatory approval process is ongoing,” Uber said.
“But the merger will benefit both drivers and users. In addition, there are many other players in the market at the service of the latter, so there is no question of monopolizing the market. But it’s too early to talk about prices.”
In turn, Yandex announced an agreement with Uber on a roaming agreement in all countries where the companies operate. For example, upon arriving in London or Bangkok, you can order an Uber from the Yandex.Taxi application, and tourists from Paris will be able to order a Yandex.Taxi from the Uber application.
As the chairman of the Moscow Chamber of Commerce and Industry Committee on the development of transport services for passenger transportation by cars told Gazeta.Ru by car Bogdan Konoshenko, the fact that the terms of the deal included a roaming agreement on the possibility of ordering Uber cars from the Yandex.Taxi application around the world shows that the company was able to build a competitive and effective technology platform for which they are willing to pay dearly.
“However, Yandex.Taxi and Uber are not the first and not the largest services that decided to merge. Not so long ago, as a result of the merger of RuTaxi, Taxi Saturn and RedTaxi, the carrier Fasten was formed, which significantly exceeds them in the number of trips. So Yandex.Taxi and Uber still occupy about 6-7% Russian market, no more. But I must say that Fasten and Maxim will now have a good, strong competitor to be reckoned with,” Konoshenko said.
The Gazeta.Ru expert does not expect any changes in the tariff policy for partners and passengers of the new company sudden changes, since “tightening the screws” instantly leads to drivers and passengers switching to competitors.
In turn, State Duma deputy from the LDPR, member of the Committee on Transport and Construction, Alexander Starovoytov, in an interview with Gazeta.Ru, noted that after the merger financial policy the new merged company should become more reasonable, which, in particular, will have a positive impact on the quality of taxi services.
“The drop in prices for transportation that we observed on the market is primarily due to the competition that Yandex and Uber staged in the fight for customers. Because of this, drivers had to work 12-15 hours. Uber seriously dumped, which, by the way, ultimately led to the collapse of the taxi market in many other countries,” he said.
According to Starovoitov, if after the merger the new company continues to develop along the path of Yandex, in the near future the taxi transportation market will be somewhat systematized.
“Of course, in general, this merger will not solve the taxi problem in Russia, but I am counting on a more adequate policy from the companies. There are three components: the passenger, who should receive an inexpensive and high-quality service, the carrier, who should make a profit from its activities, and the state, which should receive taxes and a properly structured market. All three elements must be in harmony, which, unfortunately, is not the case yet,” the expert said.
At the same time, the deputy noted that the cost of taxi services as a result of such changes in the market should rise, and the life of other carriers should become more difficult.
“Travel prices will, of course, rise. This will not happen in the very near future, but it will happen. But at the same time, the quality of these services should also improve.
“I think that if trips become 20 rubles more expensive, but there are professional drivers driving new cars, passengers will be willing to pay,” Starovoitov said. “After the merger, Yandex and Uber will become a powerful financial machine that will seriously compete with other market participants.”
Against the backdrop of the announced news, Yandex shares jumped by 17.5%. Which is quite good, considering the losses that Lately tolerated the Yandex.Taxi service. So, in the first quarter of this year, the service’s revenue for the first quarter amounted to 778 million rubles, but the adjusted loss was 1.25 billion rubles. For 2016, the adjusted loss of the service amounted to about 2.1 billion rubles. Previously Uber service also reported large-scale losses. According to the Financial Times, the company's adjusted loss for last year amounted to $2.8 billion with revenue of $6.5 billion.
