Uber’s international retreat continues.
The ride-hailing service has agreed to cede its operations to a rival in Russia and neighboring countries. Uber is creating a yet-to-be-named service with Yandex (YNDX), which is profitable and winning the battle with Uber on its home turf.
Uber will invest $225 million and contribute its UberEats service to the joint venture. Yandex will invest $100 million. But Yandex will own 59%, while Uber will own 37% and employees will hold the rest. And the CEO of Yandex, Tigran Khudaverdyan, will be in charge of the combined business.
Uber executed a similar strategy when it sold its China operations to rival Didi Chuxing in 2016, and it shut down its service in Denmark in April.
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Customers will be able to use either the Uber or Yandex app to arrange rides. The company will also serve Kazakhstan, Azerbaijan, Armenia, Belarus and Georgia.
Combined, the two companies provide more than 35 million rides a month in the region. They say that figure has grown 400% compared with a year ago, though they don’t break down how much of that growth is from Uber and how much from Yandex.
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Uber tried to portray the decision on Russia as a expansion, though it is clearly a retreat.
“This deal is a testament to our exceptional growth in the region and helps Uber continue to build a sustainable global business,” said Pierre-Dimitri Gore-Coty, the head of Uber in Europe, the Middle East and Africa.
Uber lost $708 million in the first quarter of this year alone, though its revenue grew 18% to $3.4 billion. It recently dumped its CEO, Travis Kalanick, after a series of crises, including allegations that Uber managers didn’t adequately address reports of sexual harassment.
Yandex (YNDX), which is traded on Nasdaq, reported $1.3 billion in revenue last year, up 27%, and reported a profit, two more signs that it is beating Uber in Russia. Its stock opened up 17% in New York on Thursday.
CNNMoney (New York) First published July 13, 2017: 9:48 AM ET