Chinese ride-hailing service Didi Chuxing is to acquire Uber's China business, the companies announced on Monday, in a deal, according to a person familiar with the matter, that would value the combined company at $35 billion.
Uber global will receive 5.89 percent in the combined company with "preferred equity interest" which is equal to a 17.7 percent stake. Baidu and Uber's other Chinese shareholders will receive a 2.3 percent stake in Didi Chuxing, taking the stake in combined company to 20 percent.
The $35 billion is made up of Didi's latest $28 billion valuation and $7 billion value for Uber China. Uber declined to comment on the valuation when contacted by CNBC.
An official statement from Didi said that the start-up's founder and, Chairman Cheng Wei, will join the board of Uber. Travis Kalanick, Uber Chief Executive, will join the board of Didi.
Uber has been locked in an intense battle in China with Didi, the country's largest ride-hailing service. The U.S. start-up has lost $2 billion over two years in China, the source said, as it tried to get ahead in the market.
Under the agreement, Uber China will keep its independent branding and business operations to "ensure stability and continuity of service for passengers and drivers". Didi will also integrate the "managerial and technological expertise" of the two companies.
The deal could pave the way for Didi to expand beyond China and into new markets.
"Didi Chuxing will also continue to expand its international strategy. We look forward to working with our partners at home and abroad to create more value for drivers, passengers and communities," Jean Liu, president of Didi Chuxing said in a statement on Monday.