Uber China will reportedly merge with archrival Didi Chuxing

Update: The deal has been confirmed.

Huge news for China’s ride-sharing industry: It appears that Didi Chuxing will gobble up rival Uber China in a merger deal that will value the combined entity in China at $35 billion.

The rumor has being doing the rounds for about a month now, with both sides denying but it looks like a deal is happening. Both Bloomberg and the Wall Street Journal cited sources claiming that a deal has been agreed upon. The timing is interesting, too, since last week the Chinese government released proposed regulations that will make taxi-hailing services legal from November 1.

Bloomberg reports that the deal will see Didi, which has more than $7 billion in cash on hand after extensive fundraising, invest $1 billion into Uber’s global business for Uber China’s operations. In exchange, Uber China and its investors, which include Baidu, will take a 20 percent stake in the newly merged entity in China. Uber China was most recently valued at $7 billionDidi’s most recent valuation was $28 billion.

This deal means that Didi is now invested in every ride-sharing company of size on the planet, having previously put money into Lyft, Ola in India and Grab in Southeast Asia.

We’ve contacted Uber and Didi for comment and will update this story accordingly.

This is not the first mega merger in China’s ride-hailing space. Didi Chuxing itself was created when Didi Dache and Didi Kuaidi called a truce on their capital intensive subsidies war in a merger last year that was valued at around $6 billion.

Uber has spent billions in China — a Bloomberg source said it is losing $2 billion in the country to date — so it looks like the same reasons are behind this second merger deal, albeit that the potential repercussions are very different. Offloading its Chinese unit could put Uber on track to finally list as a public company. The U.S. firm said last month that it is already profitable in Western markets and, with China its biggest money-drainer and weakest market from a competitive standpoint, a major question mark around its business will be removed if this deal goes through.