Uber Sells Its Chinese Operations to Rival ‘Didi Chuxing’ After Suffering $2 Billion in Losses

The Wall Street Journal is reporting that Uber Technologies, Inc., the global ride-hailing giant, is hanging up its cleats in China and selling its operations there to a local competitor, Didi Chuxing.

The move to sell off its Chinese assets marks an end to a bloody war of attrition between the two ride-hailing companies, in which Uber had been steadily losing profits. The $2 billion in losses that Uber had racked up in China had been eating into Uber’s profits from other regions and causing intense anxiety among investors, especially as the company prepares for its IPO, according to Bloomberg.

Selling its Chinese operations to its rival frees Uber to focus on other markets and stems its expensive losses in China. Under the terms of the deal, Uber will also receive a 5.89% stake in Didi Chuxing as well as a $1 billion investment at a $68 billion valuation from its former rival.

Uber CEO, Travis Kalanick, confirmed the acquisition in a Facebook post. “As an entrepreneur, I’ve learned that being successful is about listening to your head as well as following your heart,” Kalanick noted. “Uber and Didi Chuxing are investing billions of dollars in China and both companies have yet to turn a profit there. 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.”

Didi Chuxing will reportedly be valued at $35 billion after the acquisition. The dominant Chinese ride-hailing app formed when Didi and Kuaidi merged to fend off Uber’s inroads into their home-market. Didi Chuxing is famously backed by Apple, which invested $1 billion in the company earlier this year. In exchange, Apple is now privy to Didi Chuxing’s trove of data and expertise in self-driving and electronic automobile technology.