- Uber to Sell to Rival Didi Chuxing and Create New Business in China: In a stark signal of how difficult it is for American technology companies to thrive in China, Uber China said it was selling itself to Didi Chuxing, its fiercest rival there. The sale, which would create a new company worth about $35 billion, would end the great ride-hailing battle of China. A person with knowledge of the deal said Uber investors had been pushing for such a transaction. The companies have been fighting relentlessly for market share in mainland China for two years, spending tens of millions of dollars every month to attract riders and drivers. The merger would end that competition and create significant scale, but it would also be a repudiation of Uber’s ambitions to take on local Chinese competitors in their huge home market.Still, it is by no means a financial catastrophe for Uber, which for about $2 billion of investment in the Chinese market gets a $7 billion share in a company that is likely to grow. It also saves the cash it may have spent competing in China for other projects.Under the terms of the deal, the new company’s estimated worth is a combination of Didi Chuxing’s $28 billion valuation and Uber China’s $7 billion, according to two people with knowledge of the deal, who spoke on the condition of anonymity because the information had not yet been made public. Uber shareholders would receive a 20 percent stake in the new company. Didi Chuxing would also make a $1 billion investment in the company’s operations in the rest of the world, called Uber Global, which was lastvalued at $62.5 billion, according to the two people with knowledge of the sale. Bloomberg first reported news of the deal.
- Didi Schools Uber on Doing Business in Cut-Throat Chinese Market: The deal is the culmination of more than a year of take-no-prisoners war between the world’s two largest ride-sharing companies, a series of clashes played out in the media and on the dusty streets of hundreds of cities. That battle, waged through massive subsidies on rides, wound up costing Uber $2 billion, the people said. Alarmed, its investors clamored for a ceasefire.In the end, Didi proved too resourceful -- and too well-connected -- for the ride-sharing giant to dethrone. Uber threw in the towel just days after China banned the practice of charging less than the cost of a ride, depriving the U.S. company of a tried-and-true engagement tactic. In a blogpost obtained by Bloomberg before an official announcement, Kalanick portrayed the deal as a merger that strengthens both parties; others, including Grab CEO Anthony Tan, saw it as a humbled Uber taking its ball elsewhere.But Didi proved more creative, and local connections came through. The conflict took an unusual turn as third parties began to get drawn into the mix. In August, Uber complained it had been blocked from WeChat, the popular messaging service run by Didi-backer Tencent. Then Didi recruited allies, forging a four-way alliance with ride-sharing services that compete with Uber, including Lyft Inc. in the U.S., Grab and India’s Ola. Didi gained confidence as it entered the new year. From President Jean Liu on down, its executives were determined to deal a knockout blow. Didi began raising more money and its emboldened executives openly declared victory. “We will be the last one standing,” Stephen Zhu, vice president of strategy, said in what proved to be a prescient April address.Recent funding saw Uber’s valuation swell to $68 billion and the company said it had access to more than $11 billion on its balance sheet. Didi, said to be valued at close to $28 billion, had more than $10 billion at its disposal. In the end, Didi proved too large an opponent, with backers including some of China’s largest government institutions and even Apple Inc. The four-year-old company now handles more than 11 million rides a day and serves about 300 million users across some 400 cities, offering taxis, private cars, ride sharing and test driving.
- Didi’s acquisition of Uber China throws the global anti-Uber alliance in doubt: Didi Chuxing, China’s homegrown ride-hailing startup, was the glue that held together the global anti-Uber alliance that included Lyft, Grab and Ola. But now that Didi has acquired Uber’s China operations, that partnership has been thrown into doubt. In addition to a $1 billion investment Didi is making into Uber, the deal also brings Uber CEO Travis Kalanick onto Didi Chuxing’s board and Didi Chairman Cheng Wei onto Uber’s board. Both Kalanick and Wei are non-voting members of the board. That means, as of last night, Didi Chuxing is more invested in Uber’s success than it is in the alliance. Didi, so far, had invested about $100 million in Lyft, $350 million in Grab and $30 million in Ola, altogether about $480 million, less than half of what it just invested in Uber.
- Delphi, Singapore launch test of self-driving taxis: Delphi Automotive Plc will launch a small test fleet of automated taxis in Singapore next year, aiming to ferry passengers around a city district in one of the first real-world tests of automated rides on demand, the company said on Monday. The project, run in partnership with the Singapore Land Transport Authority, will road test a concept that many companies investing in automated driving believe offers the fastest path to making such technology commercially viable. A cab ride in a dense urban area can cost $3 to 4 a mile, Delphi vice president of engineering Glen DeVos said in an interview. “We think we can get to 90 cents a mile” with an automated vehicle. That drops the price of transporting goods and people, and allows for the costs of automated driving systems to be spread over hours of operation and multiple users. Initially, the cars will have drivers ready to take over if the piloting systems fail, DeVos said. But by 2019 or 2020, “we’ll have removed drivers from the car,” Glen DeVos, Delphi’s vice president of engineering said in an interview.
- Microsoft Sells $19.75 Billion of Bonds in Its Biggest Ever Sale: Microsoft Corp. raised $19.75 billion in the third-largest U.S. corporate bond sale of the year to help finance its planned purchase of LinkedIn Corp. Investors put in more than $50 billion of orders for the deal in the software maker’s biggest ever sale. The strong demand helped Microsoft to borrow at lower rates than it paid for the $13 billion of bonds it raised in October. It also saved about $40 million in annual interest payments compared with what it was offering to pay initially, according to people familiar with the matter. Investors have been clamoring for U.S. corporate debt in recent months. Yields are turning negative on a growing number of bonds globally as central banks in Japan and Europe ramp up stimulus packages, spurring money managers to seek higher returns in the U.S.S&P Global Ratings assigned the bonds the top AAA grade in a note reviewing the sale on Monday. Moody’s Investors Service also gave the bonds its top grade. The longest portion of the debt is a 40-year bond that yields 1.8 percentage points above Treasuries. On Thursday, Apple Inc. sold $7 billion of bonds. Investors opened their wallets for the iPhone maker, allowing the company to lower yields on all portions of the offering, which was funding shareholder buybacks. Like Apple, Microsoft’s debt issuance is tied to avoiding an increase in its tax bill. Companies with cash holdings from overseas profits have to pay a 35 percent tax to repatriate those funds to the U.S. Rather than use that cash to fund its acquisition and pay the hefty taxes that result, it is far cheaper for large multinationals like Microsoft to borrow the funds.
