Uber China merging with Didi in $35b deal

Chinese ridesharing company Didi Chuxing is merging with Uber China under a $35 billion deal that will see the rivals -- worth $28 billion and $7 billion, respectively -- join forces.

While Uber declined to comment on the matter, Uber China investors will have a 20 percent stake in the new company, according to an unnamed source.

Under the deal, Didi will also invest $1 billion in Uber's global operations.

The merger follows the revelation in February this year that Uber was spending up to $1 billion each year in China to compete with its rivals there.

"We're profitable in the USA, but we're losing over $1 billion a year in China," Uber CEO Travis Kalanick said at the time.

It also follows Apple's $1 billion investment in Didi in May, which Apple CEO Tim Cook said would help the company understand the Chinese market.

"We are making the investment for a number of strategic reasons, including a chance to learn more about certain segments of the China market," Cook said in May.

"Of course, we believe it will deliver a strong return for our invested capital over time as well."

Didi, which recently denied reports that it would be going public in 2017, last year invested $100 million in Lyft, Uber's main rival in the US. It also formed an alliance with Lyft, India's ride service Ola, and Southeast Asia's ridesharing startup Grab in an effort to compete with Uber's global dominance.

According to Didi, it conducts more than 11 million rides each day, controlling 87 percent of the Chinese ridesharing market. It surpassed 1 billion rides in 2015, six times more than Uber China.

Uber received a $2 billion cash injection from Chinese investors at the start of this year, including from HNA Group, China Taiping Insurance Holdings, Guangzhou Automobile Group, China Life Insurance investment bank Citic Securities, China Minsheng Banking, China Vanke, and China Broadband Capital.

With AAP