(Techcrunch) China’s Didi Chuxing and Uber have now both confirmed that Didi has agreed to buy Uber’s separate business in China — Uber China — as a path to trying to get the two unprofitable on-demand transportation businesses into the black. The deal had been heavily speculated earlier today.
Didi’s explanation of the financials notes that Uber will be given a 5.89 percent stake in the newly merged entity, with preferential equity that is equal to a 17.7 percent economic interest in Didi Chuxing. Existing Uber China investors, which include China’s dominant search firm Baidu, will get 2.3 percent of the new business.
Meanwhile, Uber’s CEO Travis Kalanick may have come as close as he ever has to admitting Uber may not be able to win on its own in every market where it chooses to operate:
“Uber and Didi Chuxing are investing billions of dollars in China, and both companies have yet to turn a profit there,” he notes in a blog post that we have obtained and which is going up soon. “Getting to profitability is the only way to build a sustainable business that can best serve Chinese riders, drivers and cities over the long term.”
— travis kalanick (@travisk) May 13, 2016
The official announcement from Didi does not specify how much actual money is changing hands in this deal. Didi, which claims 15 million drivers and 300 million users in China, simply said it will “obtain a minority equity interest in Uber.”
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