Shares of Yandex N.V. (NASDAQ: YNDX) saw a handy gain on Thursday after the company announced a new agreement with the ride-sharing service Uber. According to the deal, the companies will combine their businesses in Russia, Kazakhstan, Azerbaijan, Armenia, Belarus and Georgia. Uber will also contribute its UberEATS business in the region to the combined company.
Also as a part of this deal, Uber has agreed to invest $225 million and Yandex has agreed to invest $100 million into the new company, valuing it at $3.725 billion on a post-money basis. After these investments, and subject to certain adjustments at closing, the combined company will be owned approximately 59.3% by Yandex, 36.6% by Uber and 4.1% by employees of the company, on a fully diluted basis. Tigran Khudaverdyan, currently the CEO of Yandex.Taxi, will become the CEO of the combined business.
The goal of this agreement is to draw on the strengths of Yandex, the search, maps and navigation leader in the region, and Uber’s expertise to develop a fast-growing, sustainable business that best serves the needs of riders, drivers and cities.
After the closing of the transaction, consumers will be able to use both Yandex and Uber apps while the driver-side apps will be integrated, leading to shorter passenger wait times, increased driver utilization rates and higher service reliability.
Khudaverdyan commented on the deal:
This combination greatly enhances Yandex’s ability to offer better quality service to our riders and drivers, to quickly expand our services to new regions, and to build a sustainable business. The combined companies currently perform over 35 million rides a month while growing over 400% year-over-year. Since founding Yandex.Taxi in 2011, we have connected tens of millions of riders and drivers to become the largest and most trusted ridesharing business in Russia and neighboring countries. We are excited to expand on this foundation in collaboration with Uber.
Shares of Yandex were last seen trading up nearly 17% at $31.85 on Thursday, with a 52-week range of $17.28 to $32.44 and a consensus analyst price target of $27.46.