Yandex-Uber JV MLU acquires regional rival Vezet for shares and $71.5M in cash
On-demand transportation giant Uber made its name in part by aggressively entering new markets on a path of organic growth, but in recent times, it has shown itself more amenable to the concept of expansion through acquisition. Today, MLU, Uber’s ride-sharing and food delivery JV with Yandex (by way of Yandex.taxi) covering cities in Russia and surrounding regions, announced that it has acquired Vezet, a smaller rival that operates in 123 markets in the same region, for a price that’s estimated to be in the region of $204 million.
Alongside that MLU said that it would be investing an further 8 billion rubles ($127 million) in the Russian regions over the next three years, with half towards safety and security — including driver training — and half for “supporting regional drivers and taxi fleet companies.” (The latter could be in the form of special incentives to continue encouraging them to drive with MLU over others, and other loyalty programs.)
Current shareholders of Vezet “will receive new shares in MLU, representing up to 3.6% of the issued share capital of the company at closing, together with up to $71.5 million in cash,” based on Vezet meeting certain performance and integration targets, the companies said. Part of that integration will involve moving all of Vezet onto a single platform with MLU.
To be clear, the companies did not disclose the approximate valuation of the deal based on these percentages, but as a marker, when Uber last valued MLU ahead of its public listing, it put the figure at $3.68 billion. That would put shares of 3.6% at just under $132.5 million, valuing the Vezet transaction in total at around $204 million. (This is assuming that the valuation of MLU, prior to this acquisition, has not changed in the last three months.)
The deal will also slightly reduce Uber’s stake in the JV: MLU notes that following the completion of the acquisition, Yandex NV will own 56.2% of MLU, and Uber will own 35.0%, with 5.3% held by employees (part of the equity incentive plan).
The move speaks to the inevitable consolidation that has happened, and will continue to happen, in the ridesharing market. Vezet (which has a nice double-meaning in Russian: driving, and lucky — or maybe more accurately, things are going your way) itself is a combination of some smaller businesses, and today operates services under four brands: Vezet, Taxi Saturn, Fasten and Red Taxi.
It will also help MLU potentially remain in markets where it has had faced some potential issues in the past. In Kazan, for example, some had called on the government to ban MLU (specifically Yandex.taxi). That hadn’t come to pass, although the prospect of such legal actions might be diffused if it’s acquires a local operator that’s had a more harmonious rise in the market.
Vezet’s business model is built around providing a platform for individuals and existing fleets, which can use it to get routed to passengers looking for a ride from A to B. Like Uber and the many others in this business area, Vezet uses an app-based interface, but given its footprint and how it covers markets where smartphone penetration and usage are not as extensive as in mature markets, it also allows people to order rides through call centers. This deal will include all of Vezet’s assets.
While Uber originally forged an empire by entering markets on its own steam and building businesses from scratch (using tens of billions of dollars in VC funds to do it), in more recent years it’s formed regional joint ventures, including merging its operations in China with Didi and Southeast Asia with Grab alongside its Russia move with Yandex. It’s also started to acquire businesses to move into new markets, such as its recent deal to buy Careem for more than $3 billion to make a big splash in the Middle East.
The acquisition is expected to close at the end of the year, the companies said.
Source: TechCrunch
