On Monday, China’s Didi Chuxing, in which Apple has invested, announced a strategic agreement with Uber under which Didi Chuxing will acquire all assets of UberChina--including its brand,business operations and data--for operation within mainland China. Now Reuters reports that Apple's $1 billion investment in Didi Chuxing was the driving factor in Uber's decision to agree to the deal, in return for a one-fifth stake in a bigger Didi.
In exchange for the UberChina assets, Uber will receive 5.89% of the combined company with preferred equity interest that’s equal to a 17.7% economic interest in Didi Chuxing. In addition, Baidu and other Chinese shareholders will receive a 2.3% economic interest in Didi Chuxing. Under the agreement, Didi Chuxing will also obtain a minority equity interest in Uber.
According to Reuters, Didi raised far more money than Uber China, which was forced to subsidize its operations in the country using profits it had made in the U.S., Canada, and about 100 cities elsewhere. The company's relinquishment of its independence in China marks the first failure in Uber's strategy of outspending its biggest competitors.