The cab service app’s China business will retain its separate branding, and Uber’s global business will receive a 5.9% stake in the combined company, Didi Chuxing said.
Uber China launched in 2014 but so far has failed to make any profit.
The two companies have been fierce competitors for years, but Didi Chuxing dominates the market.
Didi Chuxing says it provides more than 14 million journeys a day and claims to have 87% of the market share in China.
The company is backed by Chinese internet giants Tencent and Alibaba, and has also invested in Uber’s rival US cab service Lyft.
Uber has been struggling to break into the Chinese market despite having Chinese search engine Baidu as an investor.
In February, Uber admitted it was losing more than $1 billion a year in China, spending huge sums to subsidize discounted fares.
The fierce rivalry had led Uber and Didi to heavily subsidize their journeys. The merger is likely to see fewer such subsidies.
The deal with Didi Chuxing comes just days after China agreed to provide a legal framework for taxi-ordering apps.
Both Uber and Didi have welcomed the decision, having previously operated in a legal grey area in China.
While the apps are widely popular, they have undermined business for normal taxis and have been met with protests by cab drivers.
The new rules will take effect on November 1, 2016, and will, among other things, forbid such platforms to operate below cost.
Image source: Wikimedia Commons President-elect Donald Trump celebrated his election victory at the Ultimate Fighting…
Millions of voters across the US chose to return Donald Trump to the White House…
Donald Trump declares victory in the US election as he addresses jubilant supporters in Florida.…
Stocks around the world are rising as Donald Trump appears to be on the cusp…
Donald Trump has won Pennsylvania, North Carolina and Georgia and taken a lead over Kamala…
Quincy Jones, the celebrated musician and producer who worked with Michael Jackson, Frank Sinatra, Ray…