China’s ride-sharing leader Didi Chuxing said it agreed to acquire all assets of UberChina, including its brand, business operations and data within mainland China. The deal has been valued at $35 billion, based on Didi’s $28 billion latest valuation, and Uber China’s $7 billion. The landmark transaction signals a new stage in the development of China’s ride-sharing industry.

In exchange for the UberChina assets, Uber will receive 5.89% of the combined company, with a preferred equity interest of 17.7% in Didi Chuxing, becoming its largest shareholder. In addition, Baidu and other existing Chinese Uber shareholders will receive a 2.3% interest in Didi Chuxing.

Didi Chuxing will also be making a $1 billion minority equity investment in Uber. Cheng Wei, founder and chairman of Didi Chuxing, will join the board of Uber, and Travis Kalanick, founder of Uber, will join the board of Didi Chuxing.

Didi Chuxing said it now became the only company with a joint investment from Chinese giants Tencent, Alibaba and Baidu.

“Didi Chuxing and Uber have learned a great deal from each other over the past two years in China’s burgeoning new economy,” said Cheng Wei, founder and CEO of Didi Chuxing. “This agreement with Uber will set the mobile transportation industry on a healthier, more sustainable path of growth at a higher level. Didi Chuxing commits all our energy to work with regulators, users and partners to meet the transportation, environmental and employment challenges of our cities.”

“Today we’re announcing our intention to merge Uber China with Didi Chuxing,” said Uber CEO Travis Kalanick. “As an entrepreneur, I’ve learned that being successful is about listening to your head as well as following your heart. Uber and Didi Chuxing are investing billions of dollars in China and both companies have yet to turn a profit there. I have no doubt that Uber China and Didi Chuxing will be stronger together.”

“Over 15 million drivers and 300 million registered users have joined DiDi’s open, sharing-based ecosystem that connects people, cars and lifestyles,” added Jean Liu, president of Didi Chuxing. “With the addition of the strong talents and experience of the UberChina team, Didi Chuxing will be even better-positioned to serve the Chinese people. Didi Chuxing will also continue to expand its international strategy.”

Uber China will maintain independent branding and business operations to ensure stability and continuity of service for passengers and drivers in China. Didi Chuxing will integrate the managerial and technological experience and expertise of the two teams.

The deal comes a week after China’s Ministry of Transportation issued preliminary rules on the management of online car-booking, the world’s first national-level legislation to legalize ride-sharing.

As China goes through the world’s greatest urbanization process, sharing economy initiatives have seen tremendous growth under the aegis of the country’s innovation-friendly Internet Plus strategy. The still-fledgling ride-sharing market for the 1.3 billion Chinese population is showing unrivaled momentum.

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