Uber’s China business in merger talks

March 18, 2015, 10:27 AM UTC
Security guards chat near a Baidu logo at the Baidu headquarters in Beijing on December 17, 2014. Baidu, China's leading search engine, and ride sharing company Uber announced a strategic investment and cooperation agreement on December 17. AFP PHOTO / Greg BAKER (Photo credit should read GREG BAKER/AFP/Getty Images)
Photograph by Greg Baker — AFP/Getty Images

Uber is planning to merge its Chinese business with a competitor that’s often called the ‘Uber of China,’ the news portal Sina.com reported yesterday.

Sina said Baidu (BIDU), which has stakes in both companies after investing a reported $600 million in Uber last year, is behind the merger talks, which come only a month after the top taxi hailing apps in China, Tencent Holdings-backed Didi dache and Alibaba Group-backed Kuaidi Dache, agreed to merge in order to stem losses and end a ruinous price war (to the chagrin of their customers).

Uber hasn’t gained substantial market share points since arriving in China last year, while Yidao Yongche is China’s leader in more upmarket private cars. It’s easy to surmise that Baidu would want to reduce the fighting between two competitors it backs, while Uber would want some local help in a tough market for foreign companies.

Regulatory worries for Uber might be playing a factor. Earlier this year China’s Ministry of Transport said Uber and other ride services had to use licensed drivers, putting Uber’s operation into a kind of legal limbo. Reuters reported earlier this month that China’s transport minister hoped to have new regulations in place in the first half of this year.

The newly merged company might want get ahead of the new rules. We’ll know more when the deal is settled—possibly by next week.

Watch more business news from Fortune: