>> Deals on wheels in China on Monday, the country's number one taxi app Didi Chuxing confirming its buying Uber's Chinese business, creating a $35 billion powerhouse. The two have been locked in a bruising price war for a long time, but with more than 11 million rides a day, Didi has always been miles ahead in China.
Reuter's Jake Spring says this is a deal that works for both sides.>> There's been speculation of a tie up between Uber and Didi since last year, at least. And last week in earlier, there were reports that was pressure from investors for some sort of decant between the two companies because they were spending billions to subsidize rides in attempt to gain more market share.
Both companies have been spending upwards of a billion dollars on subsidies for rides to offer them a cut rate prices, in order to gain market share. Uber had been gaining ground, but Didi still had about 87% market share, so it was a costly and slow battle. So, this merger could potentially put an end to that.
>> Uber will take a 20% stake in the new combined business, shareholders in Uber China will also get the same, and Didi will plow a billion dollars into the U.S. company. It's called the makings of a good deal for investors, but this tie-up may not be such good news for the people actually using the service.
>> Well, it's hard to say exactly what both companies will do, but the logic goes that they'll have less pressure to subsidize rides, so ride costs to the end user would increase.>> The deal comes at a convenient time for online cab services in China. They were just made officially legal last week, and no longer have to operate in the grey area they once did.
A long awaited move for a booming industry in the world's number one car market.