Uber is scaling back in Russia by spinning off its operations in the country to form a new company majority-owned by local rival Yandex.

The deal involves Uber’s ride-hailing and food-delivery services in Russia, as well as Azerbaijan, Belarus and Kazakhstan, folding into the new firm, along with Yandex’s own taxi app, which also operates in Armenia and Georgia. Both brands will continue to operate, but the driver-side apps will be merged into one, the company said

“The new company’s goal will be to serve the needs of riders, drivers and cities as we develop a fast-growing, sustainable ride-sharing, food delivery and logistics business in the region,” said Pierre-Dimitri Gore-Coty, Uber’s boss in Europe, the Middle East and Africa.

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“Combining Yandex’s local expertise in search, maps and navigation with our leading global experience in ride-sharing will enable us to build the best local services and provide a credible alternative to car ownership across the region.”

The new firm, which has not been named, will be 36.6% owned by Uber, which will have three of the seven board seats, and is investing a further $225m (£174m) in the spin-off. Its share will be worth almost $1.4bn, according to Gore-Coty.

Yandex will own 59.3%, and employees 4.1%. The chief executive of Yandex.Taxi, Tigran Khudaverdyan, will become the head of the new firm.

“Our users will have seamless global roaming across the Uber and Yandex.Taxi platforms,” said Khudaverdyan. “For example, a user of Yandex.Taxi could order an UberX directly from their Yandex.Taxi app upon arriving in London or Bangkok. An Uber user arriving in Moscow from Paris will be able to order a Yandex.Taxi straight from their Uber app.”

The deal has echoes of Uber’s previous moves in China, where the company sold its operations wholesale to native ride-sharing firm Didi last year.

Although the company realised a substantial profit on its investment, and now holds a stake in Didi potentially worth more than $8bn, it was widely seen as an embarrassing climbdown, and an admission that it was unable to throw money at endless price wars in some of the world’s larger emerging markets.

Unlike the Didi deal, however, Uber will remain an active participant in its new Russian investment, and its users in the country will continue to use the same app as the rest of the world.