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Uber to Sell China Business to Rival Didi After Losing Billions

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Re: Uber to Sell China Business to Rival Didi After Losing Billions

#101

Post by yladiz »

curiousDog wrote: post #11

Next up, gobbling up Lyft. Looks like they really want to be the monopoly at IPO time. At this rate, they'll probably IPO at more than $100 billion. Sigh, should've interviewed with them last year, haha

It's extremely unlikely that they'll IPO for anywhere near $100 billion, or even near their current valuation (for reference, the largest IPO in history is Alibaba with $25B). Their accounting practices most likely don't utilize GAAP, which is how they get around saying "we're profitable in the US", so I wouldn't be surprised if they were actually significantly losing money. Plus with the multitude of lawsuits against them right now, it's not hard to imagine they lose a good chunk of their valuation in the near future if the lawsuits don't really favor them.

They may IPO (if they are indeed profitable and don't want to keep looking for Series N style fundraising), although I doubt it, and if they did, it's definitely unlikely to be anywhere near $100 billion.

Re: Uber to Sell China Business to Rival Didi After Losing Billions

#102

Post by eva1984 »

netcan wrote: post #73
wildmusings wrote: post #8

Earlier quoted context omitted.

Yes, this is a face-saving use of language. Most "mergers" that you hear of are actually acquisitions.

What's the non-face-saving language?

Fail to compete with Didi in China

Re: Uber to Sell China Business to Rival Didi After Losing Billions

#103

Post by ryporter »

msvan wrote: post #22

Is there no antitrust law in China? Surely the optimal solution to two big corporations hemorrhaging money in competition for consumers is not that they stop competing, but rather that they cut costs. Or is such a scenario simply not possible in the dog-eat-dog tech world?

Not when a Chinese company is buying a company from a foreign company. The Chinese government stronger favors Chinese companies, all the more so when they are partially owned and/or well connected to the state. There is no way that this deal could have taken place with roles reversed. (Note: I'm not judging the policy -- just stating it.)

Re: Uber to Sell China Business to Rival Didi After Losing Billions

#104

Post by paradite »

The articled linked has changed the title to: "Uber to Sell China Business to Rival Didi After Losing Billions"

This is a more accurate title being used by major news media:

"Uber sells Chinese business to Didi Chuxing" - http://www.bbc.com/news/36938812

"Didi Chuxing to Buy Uber’s China Operations" - http://www.wsj.com/articles/china-s-didi-chuxing-to-acquire-...

It is also being used in Didi's official Weibo (in Chinese): http://weibo.com/2838754010/E1ykp4eJn?refer_flag=1001030101_...

Re: Uber to Sell China Business to Rival Didi After Losing Billions

#105

Post by eva1984 »

ravivyas wrote: post #39
sethbannon wrote: post #18

Uber finally threw up the white flag in its fight against Didi in China. I wonder how big of a dent this puts in Uber's sheen of invincibility in other markets. Will investors be braver backing other regional competitors like Ola in India and Lyft in the US?

China is a whole different market. Nothing can be extrapolated from China. Amazon lost in China, but is doing well in India.

Amazon is doing...OK. Even with Taobao/Tianmao, it is still relevant in China, and Kindle is the still the leader of E-reader market.

Re: Uber to Sell China Business to Rival Didi After Losing Billions

#106

Post by 20andup »

fuzionmonkey wrote: post #30
sudoscript wrote: post #3

I can't tell if this is a good deal for Uber investors or not. As I understand it, Uber will own a 20% share in the combined company. The combined company is valued at $35 billion, so Uber's share of the value will be $7 billion (actually less, since they also need to share it with Baidu which invested directly into Uber China too). $7 billion doesn't sound too bad as an exit. However, if Uber's China business is wor…

It's not a $7 billion "exit". It's an investment for a 20% stake in Didi for $7 billion, which presumably will increase in value as Didi continues to expand in China, especially with less need for ridiculous spending on driver incentives since they will no longer be competing with Uber. Uber probably had something in the ballpark of 20% market share in China so it sounds like the two decided to simply make peace and…

Its not a 20% stake.

"Uber Technologies will receive 5.89 percent of the combined company with preferred equity interest equal to 17.7 percent of the economic benefits."

Re: Uber to Sell China Business to Rival Didi After Losing Billions

#107

Post by [deleted] »

fuzionmonkey wrote: post #30
sudoscript wrote: post #3

I can't tell if this is a good deal for Uber investors or not. As I understand it, Uber will own a 20% share in the combined company. The combined company is valued at $35 billion, so Uber's share of the value will be $7 billion (actually less, since they also need to share it with Baidu which invested directly into Uber China too). $7 billion doesn't sound too bad as an exit. However, if Uber's China business is wor…

It's not a $7 billion "exit". It's an investment for a 20% stake in Didi for $7 billion, which presumably will increase in value as Didi continues to expand in China, especially with less need for ridiculous spending on driver incentives since they will no longer be competing with Uber. Uber probably had something in the ballpark of 20% market share in China so it sounds like the two decided to simply make peace and…

[deleted]

Re: Uber to Sell China Business to Rival Didi After Losing Billions

#108

Post by eva1984 »

paradite wrote: post #104

The articled linked has changed the title to: "Uber to Sell China Business to Rival Didi After Losing Billions" This is a more accurate title being used by major news media: "Uber sells Chinese business to Didi Chuxing" - http://www.bbc.com/news/36938812 "Didi Chuxing to Buy Uber’s China Operations" - http://www.wsj.com/articles/china-s-didi-chuxing-to-acquire-... It is also being used in Didi's official Weibo (in Ch…

For non-Chinese audience, this is from Didi's official Weibo account:

"滴滴出行宣布收购优步中国，融合资源，促进中国移动出行行业更健康发展。"

"Didi Chuxing announces the acquisition of Uber China, (for) integration of resources and facilitating Chinese mobile transportation business for healthier development."

Edit: typo

Re: Uber to Sell China Business to Rival Didi After Losing Billions

#109

Post by rtpg »

discodave wrote: post #45
johnloeber wrote: post #7

Earlier quoted context omitted.

Uber's China business was losing money before (I believe to the tune of about $1bn/year), and it looked like they weren't going to get a permanent hold in that market. Local competition was very strong. Consequently, I would conjecture that China was never a large part of Uber's valuation. Leaving it at slightly more than 10% of their valuation seems reasonably realistic to me. Keep in mind: * The major Chinese citie…

> Uber's China business was losing money before (I believe to the tune of about $1bn/year) > I would conjecture that China was never a large part of Uber's valuation These two statements are not exactly congruent. Investors in later funding rounds would have expected their investment to be used to grow the valuation. In other words, they were funding the losses in China so they should expect a return.... unless they…

Here's a narrative:

"If we spend a billion in China now we'll make it!"

(Year later)

"Lots of competition but this time it's different!"

(Something something China)

"OK maybe this isn't working out. Let's salvage what we can"

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