Yandex uber association. Combining giants: why Uber and Yandex.Taxi merged. The total cost of three trips

Global Uber services and Yandex.Taxi in Russia created a combined company that will also operate in the markets of Kazakhstan, Armenia, Azerbaijan, Georgia and Belarus. The name of the new association is NewCo, the company will be registered in the Netherlands.

A package of 59.3% in NewCo went to Yandex, 36.6% to Uber, another 4.1% to employees. Under the terms of the agreement, the parties agreed to invest $100 million and $225 million respectively in the company. The world media called the agreement the departure of Uber from Russia and other CIS markets (except Ukraine). The price of Yandex shares on the Moscow Stock Exchange hit a historic high yesterday. The fortune of businessman Arkady Volozh, one of the co-owners of Yandex, grew by $200 million in one day.

Why did the deal happen? The agreement can be called the final chord in the fierce competition that Uber faces in the course of its active external expansion, in particular in Russia, world media write. The Yandex.Taxi service began operating in the Russian Federation in 2011, Uber - two years later. The latter developed quite aggressively, its share in the Russian market in 2016 was about 18%, which is twice as high as a year earlier.

But Yandex is still ahead: it has 30%, and also doubles in a year. The volume of the taxi market in the Russian Federation in 2016 was estimated at about $ 9 billion, and recently it has been growing rapidly thanks to these two companies. There are not so many players on the market anymore - in April, large taxi aggregator services Fasten and RuTaxi announced the merger.

In addition to this tandem, as well as Uber and Yandex, a notable company is the Gett service, there are also smaller services - Maxim, Vazi and others. With the advent of Uber, competitors could not avoid a price war, and the reduction in the cost of trips led to a cooling of interest in this business on the part of drivers. Experts are sure that consolidation is overdue. “The Yandex.Taxi company set the goal of a large placement of shares, so it was necessary to gather the maximum audience at any cost. It is clear that in this price war, sooner or later, someone had to run out of money,” said Daniil Vakhovsky, marketing director of the Ukrainian service Uklon.

Who earned more? Uber does not disclose its revenue and profit data for individual countries, in 2016 the global company received $ 2.8 billion in losses. "Yandex.Taxi" in the Russian Federation was also unprofitable - $ 35 million loss in 2016. The service planned to make a profit only by 2021. In April, the Russian Kommersant wrote that Yandex.Taxi issued a mandate to JP Morgan to search for an investor with the intention of raising about $150-200 million for development, possibly in exchange for a stake of 13-17%.

One of the publication's sources suggested that the company needs funds for acquisitions on the eve of the expected market consolidation. "With this agreement, Yandex eliminates an aggressive competitor, which will ultimately lead to improved monetization and profitability," Sergey Libin, an analyst at Raiffeisenbank, told Reuters. Others add that the economics of the Uber project made it impossible to continue to subsidize trips given a small market share. Whereas the organic growth of the company is already on the verge of exhaustion, and it would be more difficult to increase further.

Why Uber is investing more money but gets fewer shares? The contributions were calculated based on the valuation of the companies made during the preparation of the agreement, says Chief Specialist for analytics and strategy of Mail.Ru Group Alexander Gorny. Uber didn't get much, and the company added more money to increase its stake. But still not enough money to make it 50%. Yandex was indeed significantly larger in all respects,” says Gorny.

“The Yandex.Taxi business in the region is larger than the Uber business, so it is logical that Yandex's share in the new company is larger. We consider the agreement very beneficial for us,” commented Uber.

Uber has profit problems in other markets as well. Why is he leaving Russia? While such a move is indeed rare for a company that is still expanding its geography more often than narrowing it down, this happened to Uber not only in Russia. Last year Chinese company Uber China has teamed up with local rival Didi Chuxing. It was the latter company that became the platform for the unification. Prior to this, Uber had spent billions of dollars on subsidies for local drivers and still could not withstand a tough price war.

After the merger, he received a 17.5% stake in the joint venture, which corresponds to about $ 8 billion. At the same time, the company does continue to suffer losses in India and Southeast Asia, writes Bloomberg. The agency's analysts predict that the agreement in Russia will be a precursor to further consolidation processes in this part of the world, including in large emerging markets.

So what will both companies get in the end? First of all, mutual access to markets and capital. Today Uber is available in 16 cities of Russia, Yandex.Taxi - in 126 cities and six countries. Accordingly, as a result Uber deals will get access to all other cities of Russia, Armenia, Georgia. Whereas Yandex.Taxi automatically enters the Azerbaijani market, where Uber operates. According to the Russian RBC, before the agreement, the daily number of taxi rides from Yandex was 500,000, from Uber - 160,000 (the combined Fasten service, according to the company itself, has 1.5 million trips per day).

Now the former competitors from the new tandem expect to serve together 35 million trips, the total cost of which will be about $135 million. That is, in terms of revenue, the total share of NewCo in the market will be about 16%. The tandem participants themselves estimate the value of the new company at $3.73 billion. It will work on the same technology platform, but both applications will still be available to users.

Will taxi prices go up now? Analysts disagree. Some believe that yes, since it is precisely the cessation of price dumping that is one of the goals of the association. Others are sure that prices will remain the same as long as there is still competition, and perhaps the market will continue to grow. The founder of the Gett service, Dave Weiser, has already predicted that prices will rise, and the margins of this business in Russia will stabilize. Representatives of the new company themselves assure that there are no plans to revise tariffs yet. In any case, the agreement will still be carefully studied by the antimonopoly authorities, which must give their opinion within 30 days.

And what about Uber in Ukraine, why didn’t the company enter into the agreement? Most likely, because of the political risks that the Yandex brand bears in Ukraine. “In Ukraine, the Yandex and Yandex.Taxi companies are under sanctions in accordance with the order of the president and the decision of the National Security and Defense Council,” recalls Daniil Vakhovsky. At the same time, he suggests that the deal could also include Ukrainian business, but without advertising it.

“It is quite possible, because the agreement has not yet been closed, its details have not been made public, which means that we may not know everything,” he says. Is such a consolidation of the taxi market in Ukraine possible in the near future? Not likely, says the expert.

“Firstly, because all players in Ukraine are quite independent, and secondly, because our market is in a much less adequate state in terms of regulation than in Russia. There, after all, it is more civilized and orderly,” Vakhovsky believes. The press service of Uber previously reported that Ukraine is not part of the agreement with Yandex. But they added that because of her, Uber abandons its previously announced plans to open a central office in Kyiv to work in the CIS.

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The #DeleteUber hashtag went viral on Twitter after the company sabotaged a taxi union strike at a New York airport in January 2017. Drivers protested the Trump administration's ban on citizens of seven Muslim countries from entering the United States. Uber not only continued to carry passengers, but defiantly did not raise prices, despite increased demand. And that was just the beginning of a not-too-successful year. The ensuing string of scandals involving sexual harassment of employees, surveillance of users and cover-ups of customer data theft by hackers forced the resignation of Uber CEO and founder Travis Kalanick.

Following the reputational losses came news of material losses. In April, Uber revealed for the first time financial indicators, and it turned out that with revenue of $6.5 billion, the company ended 2016 with a loss of $2.8 billion. It was mainly the international expansion of Uber that became unprofitable. At the same time, the company's capitalization was estimated at $69 billion in September 2017.

In France, the protests of taxi drivers against Uber escalated into riots. By a court decision, the service was forced to leave Denmark. The Hungarian authorities passed a law blocking the activities of the aggregator. Elsewhere, grueling competition with local players has led to mergers with them. “As we can see, Uber does not have enough strength and capabilities to compete on its own in difficult markets: the company left China, and in Russia it was forced to partner with Yandex in order not to lose the market,” notes the director of IIDF Invest Sergey Negodyaev. On November 24, the FAS approved the merger of the companies, a day later, a similar decision was made by the Belarusian regulator MART. The transaction will be closed at the beginning of 2018 so as not to create problems for users and drivers during new year holidays. The combined business is valued at $3.725 billion.

How did Yandex manage to beat its American competitor?

Analysis of trips

Uber had a simple business model: raise investment and use it to subsidize rides. This helped to aggressively capture markets around the world, but recently the aggregator has met with more and more serious resistance. “The strategy is failing,” stated the chairman of the public movement TAXI-2018, Stanislav Schwagerus.

The conquest of living space was indeed unprofitable: in February 2016, Travis Kalanick told the Canadian publication Betakit that, trying to compete with local services, the company loses about $1 billion annually in China. And all in vain: by 2016, the giant Didi Chuxing occupied, according to its management, more than 87% of the market, and Uber was trying to master the remaining segment by increasing travel subsidies. By the end of the third quarter, it became clear that such a strategy was not working, and on August 1, Uber China announced a merger with Didi Chuxing Technology.

Uber came to Russia in 2013, two years after the launch of Yandex.Taxi. At the start to domestic system about 1000 drivers were connected, a year later their number doubled, and by 2013 the share of Yandex.Taxi in the Moscow market of legal transportation was close to 20% and continued to grow (revenue amounted to $4.2 million). Less than six months later, the “sanctions war” began, which complicated the situation American company in Russia. In September 2014, Deputy Chairman of the State Duma Committee on Transport, LDPR deputy Alexander Starovoitov accused Uber of the collapse of the national taxi market and called for the service to be banned.

“The Russian government is closely monitoring the situation with passenger traffic - the prevailing freemen, when Uber actually worked on the domestic market under Dutch law, nobody liked,” recalls Stanislav Schwagerus.

AT Russian Uber started the usual game, using dumping to increase market share. In September 2014, the UberX service was launched, where the cost of the minimum order is 99 rubles - half that of competitors. Social movement Taxi Forum, which monitored the taxi market in early 2015, gave Uber 10-15% of the total number of online orders in Russia.

But, despite all efforts, it was not possible to catch up with Yandex.Taxi. By the end of the second quarter of 2015, according to Bloomberg, Yandex had 15,000 cars in Moscow, while Uber had five times less. The company's network also grew more slowly: when Tigran Khudaverdyan, head of the Yandex taxi division, told foreign journalists about plans to launch the service in 14 more cities by the end of the year, Uber was present only in Moscow, St. Petersburg, Yekaterinburg and Kazan.

In 2016, the gap persisted: according to a report by Credit Suisse, Yandex.Taxi remained the most popular service with 500,000 trips per day. Uber, although it took second place, beating Gett, its figures were three times less than the leader - 150,000-170,000 trips.

Yandex.Taxi remained the leader of the online segment in 2017, occupying up to 50% of it, while Uber accounted for half as much - 23%. At the same time, according to Credit Suisse, orders via the Internet accounted for 13% to 17% of the total volume of passenger traffic. The competitive race in Russia and the CIS cost Uber $170 million over three years.

Uber was just late for Russian market and could no longer catch up with the leader. “Uber didn’t have a chance in the beginning. They would continue to waste money competing with Yandex, East Capital fund partner Jacob Grapengiesser told the Financial Times.

Uber 2.0

The deal with "Yandex" is called the first strategic decision new Uber leadership. Dara Khosrowshahi, who took over the company at the end of August, inherited not a successful start-up that sets the fashion in Silicon Valley, but a loss-making company full of scandals and investigations. In an interview with reporters, he said that he intends to build "Uber 2.0" and will try not to repeat the mistakes of the previous leadership.

But the decision to deal with Yandex was obviously not made by Khosrowshahi. The arrangements were first announced on July 13, between the departure of the old CEO and the appointment of a new one, when the company was run by a board of directors. The creation of a joint venture looks like a logical continuation of Kalanick's actions in China: Uber is merging with its largest competitor in order to painlessly leave an unsuccessful market for itself. This is confirmed by Bloomberg sources: it was the founder of Uber and vice president Emil Michael (who also left the company in the summer) who were the main participants in the negotiations with Yandex. The venture will merge the Yandex.Taxi and Uber businesses in Russia and several countries of the former USSR, where companies were present, except for Ukraine, which is likely due to sanctions against the Russian IT giant.

“Now both Yandex and Uber have their own IT platforms. As far as I know, work after the merger will continue on the Yandex site. And nothing will change for Yandex.Taxi users, but Uber drivers will already work on the domestic platform,” said Irina Zaripova, chairman of the Public Council for Taxi Development.

The unified platform will affect 127 cities and six countries (Russia, Armenia, Azerbaijan, Belarus, Georgia and Kazakhstan), Tigran Khudaverdyan, CEO of Yandex.Taxi, wrote on the Yandex blog. In June, the joint company would look like this: 35 million trips for a total of 7.9 billion rubles.

If we consider this estimate as a forecast, then it seems a little underestimated in comparison with the figures given by Bloomberg, referring to the presentation for investors of the new company: the volume of passenger traffic per year in Russia alone is $1.1 billion for Yandex.Taxi and $566 million from Uber. The recalculation of the total volume for a month gives a similar result (7.9 billion rubles), but this does not take into account transportation in other countries that are the subject of the transaction.

A Securities Commission announcement issued on the day the deal was announced states that Yandex N.V and Uber International C.V will transfer their businesses to new company MLU B.V registered in the Netherlands. MLU will receive $100 million from Yandex and $225 million from Uber and will be able to use their trademarks. Shares in the joint venture will be distributed in a different proportion: Yandex will receive 59.3%, Uber - 36.6%, the remaining 4.1% will go to employees. The Russian side also retains the right to sell Uber a 2% stake in the combined company in exchange for a class A stake in Uber.

In addition to the countries listed in the official statement, the MLU will also be able to operate in Kyrgyzstan, Moldova, Tajikistan, Turkmenistan and Uzbekistan "subject to obtaining the appropriate permits."

Thus, the deal secures for the united business the rights to practically the entire post-Soviet space, with the exception of the Baltic countries and Ukraine.

The combined business, valued by the parties at $3.725 billion, according to the founders and analysts, has a good future. Representatives of Yandex are guided by the opinion of VTB Capital, which estimated the volume of the Russian legal transportation market at 501 billion rubles in 2016, and the data Analytical Center under the government of Russia in the "shadow segment" for 2015 - 116 billion rubles. Based on these figures, Khudaverdyan hopes that once the deal is closed, the new company will account for about 5-6% of all passenger traffic in Russia. A Credit Suisse report says that after the merger, the company will be able to claim 69% of online taxi bookings, i.e. 75% of the online market in value terms.

The UBS report testifies to long-term prospects. According to its experts, last years the shares of offline taxis and the “shadow segment” in the transportation market are declining, and by 2021 the online segment in the legal taxi market in Russia will grow to 80% from the current 20%. MLU will fulfill about 80% of online orders.

The upcoming IPO in the US looks promising. Yandex CFO Greg Abovsky said this in an interview with Bloomberg, adding that the initial public offering could take place in early 2019.

- With the participation of Alexander Baulin

Today, Yandex and Uber decided to merge online ride booking businesses and create a new company for this. This was reported by representatives of "Yandex" in his blog. According to Vedomosti, the alliance will operate in Russia, Azerbaijan, Armenia, Belarus, Georgia and Kazakhstan. Uber's business in Ukraine is not part of the deal.

According to agencies, immediately after the news appeared in the media, Yandex quotes on the Moscow Exchange soared by almost 7%. Uber and Yandex decided to invest $225 million and $100 million respectively in the new company, valuing the combined company at $3.725 billion. Yandex will own 59.3%, Uber will own 36.6%, and % - to employees of the combined company.

“Our teams will be united. I'm becoming CEO united company, Tigran Khudaverdyan, CEO of Yandex.Taxi, said. According to Khudaverdyan, the companies want to build "personal public transport" together - an alternative to a private car, buses and metro.

According to Financial Times analysts, the deal means that Uber is losing the Russian taxi market to Yandex after several years of intense competition. This is Uber's first strategic move since the controversial departure of founder Travis Kalanick.

After the deal is closed, both applications for ordering trips - both Yandex.Taxi and Uber - will continue to be available to users. But taxi fleets and drivers will switch to a single technological platform, which will increase the number of cars available for order fulfillment, reduce the time for their delivery, reduce idle mileage, and increase the reliability and availability of the service as a whole, the message emphasizes.

“The combined company will use Yandex technologies and knowledge in the field of cartographic and navigation services and search engines and Uber's experience as the world's leading online ride-sharing service."- noted the parties.

The boards of directors of both companies have already approved the deal, now regulators must agree on it. The parties expect to complete the merger in the fourth quarter of 2017. According to statistics for the past June, the combined platform will cover 127 cities in six countries, both services account for 35 million trips per month, their total cost amounted to 7.9 billion rubles.

Added

This unification agreement directly affects Belarus.

- Belarus, as well as Azerbaijan, Armenia, Georgia, Kazakhstan and Russia, is included in the sphere of interests, in the sphere of activity of the new company, which will be formed as a result of the merger of Yandex.Taxi and Uber,- commented on the situation to the correspondent of Onliner.by in Uber. - Agreement signed, formation legal entity and the new company, according to the plan, should indeed be completed in the fourth quarter of 2017.

Uber explained that the new company will start its activities at the same time in Russia and Belarus, as well as in other listed countries, and will replace the Uber and Yandex.Taxi services.

"" and signed an agreement to merge online travel booking businesses in Russia, as well as in Azerbaijan, Armenia, Belarus, Georgia and Kazakhstan, according to a Yandex blog. Against the backdrop of the deal, Yandex shares rose more than 12% in NASDAQ preliminary trading. Quotations on the Moscow Exchange grew by more than 14%.

Under the terms of the agreement, Uber and Yandex will invest $225 million and $100 million, respectively, in the new company, valuing it at $3.725 billion. Given these investments and possible adjustments, Yandex will own 59.3% of the company at the close of the transaction, 36, 6% for Uber and 4.1% for employees. The companies expect to close the deal in the fourth quarter of 2017, after regulatory approval. Tigran Khudaverdyan, CEO of Yandex.Taxi, will head the company.

The new company will leverage Yandex's technology and expertise in mapping and navigation services and search engines, and Uber's experience as the world's leading online travel booking service. The companies also concluded a roaming agreement, under which you can order Uber taxi from the Yandex application and vice versa.

Khudaverdyan said that both service applications will remain available for ordering trips, and drivers will be combined into a single platform. According to him, this will increase the number of available cars and reduce the waiting time for an order. According to him, the companies want to build together "personal public transport" - an alternative to a personal car, buses or the subway.

“We will also continue to develop the technology of an unmanned vehicle, the first successes of which were published a few weeks ago. We use the many years of accumulated experience of our engineers, their knowledge in computer vision, pattern recognition and machine learning. I hope that soon there will be something to brag about,” noted Khudaverdyan.

"This combination benefits not only both companies, but most importantly - users, drivers and cities - also said Pierre-Dimitri Gore-Koti, head of Uber in the Europe, Middle East and Africa region. - This transaction confirms the exceptional growth of Uber in the region and will help in the further formation of sustainable international business".

The combined company will cover 127 cities in six countries and carry out about 35 million trips per month worth 7.9 billion rubles, Yandex calculated. In addition, the UberEATS food delivery service, recently launched in Moscow, will continue to develop in the new company and will use the Yandex.Maps walking routing technology.

Uber entered the Russian market in November 2013 in Moscow, by July 2017 the American service can be used in almost 20 Russian cities. Yandex.Taxi was launched in Moscow in October 2011. Currently Yandex.Taxi operates in more than 100 major cities in Russia, Belarus, Ukraine, Armenia, Georgia and Kazakhstan.

Uber did a similar merger in China in 2016. The service has merged its Uber China business with its main local rival, Didi Chuxing. Then the companies merged on the Didi Chuxing platform, which received the Uber China brand, business and company data, and Uber received a stake in the joint venture.

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