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Yandex.Taxi, Uber agree to merge businesses in Russia and neighboring countries

July 13, 2017, 13:26 UTC+3

Uber will invest $225 mln and Yandex will invest $100 mln into the combined company

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© Andrei Makhonin/TASS

MOSCOW, July 13. /TASS/. Russian online service Yandex.Taxi and Uber have agreed to combine their businesses in Russia, Azerbaijan, Armenia, Belarus, Georgia and Kazakhstan, according to the report from Yandex.

According to the report, both Yandex.Taxi and Uber app will operate as before, driver apps, on the other hand, will be transitioned to a unified platform. "This combined driver platform will significantly increase the number of available cars, reduce passenger wait time, and boost vehicle utilization. Drivers will be able to perform more trips per hour while passengers will continue to enjoy affordable prices," the company said.

The new company will also operate the UberEATS service in the region.

Uber will invest $225 mln and Yandex will invest $100 mln into the combined company, valuing it at $3.725 bln on a post-money basis. "On a pro forma basis, Yandex will own 59.3% of the combined company, Uber will own 36.6%, and employees will own 4.1%," Yandex said.

At the same time, Yandex press service told TASS that the company does not rule out the initial public offering (IPO) for the new Yandex.Taxi and Uber and company.

The transaction is still subject to regulatory approvals and is scheduled to close in the Q4 2017.

"The combined company will benefit from the robust technology stack that we have developed and the world-class navigation and mapping technologies of Yandex. Over the past year we have made several significant leaps in our routing and ride-assignment algorithms that have greatly increased vehicle utilization. For example, now, during rush hour, drivers can perform 30% more trips than before. Unifying our drivers platforms will create an even greater opportunity to improve the quality of our services and further boost vehicle utilization," according to Yandex.

The two teams will be integrated together and the current CEO of Yandex.Taxi Tigran Khudaverdyan will serve as the CEO.

According to analysts, the size of the official Russian taxi sector reaches approximately $8.4 bln (2016, VTB Capital). "That means that the combined company’s share of the taxi sector would have been only about 5-6%," Yandex said.

According to the company, the service’s users will have "seamless global roaming across the Uber and Yandex.Taxi platforms."

In late May, Yandex has demonstrated an early prototype of its driverless car technology and plans to continue developing this project in the future.

In turn, Chairman of the Public Council for the development of taxi Irina Zaripova noted that the merger will increase the number of orders and the volume of trips for taxis that previously worked only with one of the aggregators, as well as simplify the access for more passengers.

"On the other hand, I do not think that the tariff policy for services will change - the new structure has a large number of competitors, such as Gett, Fasten, RuTaxi, Maxim and, which occupy significant market shares. Any decisions of the joined company that lead to higher tariffs for taxi services will lead only to customers and drivers flowing to the competitors, which will have a negative impact on the quality of the service. It is unlikely that Yandex and Uber do not understand this," she told reporters.

Uber will not change tariffs after merging with Yandex.Taxi, both applications will continue to work, Uber press service told TASS.

"After the transaction is closed, applications - both Yandex.Taxi and Uber - will be available to users in the foreseeable future," the press service said, adding, "Before the deal is closed, both companies remain independent organizations and continue working in the normal mode. The new company will be established only after the transaction is approved and closed."

The companies plan to send an application to the Federal Antimonopoly Service (FAS) of Russia in the coming days, Uber noted. The deal has already been approved by the Boards of Directors of Uber and Yandex.

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