Uber is to merge its China unit with rival Chinese ride-hailing service Didi Chuxing, in a deal that would value the combined company at $35 billion (S$47 billion), according to media reports and a person familiar with the matter.
Uber China investors will take a 20 per cent stake in the merged company. The $35 billion valuation is made up of Didi's latest $28 billion valuation and Uber China's $7 billion valuation.
Uber declined to comment when contacted by CNBC. However, at statement from Didi Chuxing, seen by Reuters, confirmed the deal, saying that Uber Global will hold a 5.09 per cent stake in the merged Chinese operations, Uber Chief Executive Travis Kalanic will join the board of Didi and Uber China would keep its brand and identity.
Uber has been locked in an intense battle in China with Didi, the country's largest ride-hailing service. The US start-up has lost $2 billion over two years in China, the source said, as it tried to get ahead in the market.
Chinese news outlets and social media sites were circulating a blog post believed to be written by Kalanick in which he acknowledged that both Uber and Didi have been spending billions of dollars in China but neither have been profitable.
"Getting to profitability is the only way to build a sustainable business that can best serve Chinese riders, drivers and cities over the long term," Kalanick said.
"I have no doubt that Uber China and Did Chuxing will be stronger together," Kalanick said in the post, according to Chinese reports. CNBC was unable to confirm the veracity of the blog post.
The story was first reported by Bloomberg.
Last week China laid out new rules that legalized ride-hailing apps, a move welcomed by both Didi and Uber.
DidiChuxing, which in Chinese literally translates to "honk honk, commute," was previously known as Didi Kuaidi, after being created in early 2015 from the merger of China's two largest ride-hailing apps at the time, Didi Dache and Kuaidi Dache.
It recently closed a financing round worth $7.3 billion.