What happened

Shares of Russian search-engine leader Yandex (NASDAQ:YNDX) lifted off in a big way on Thursday, on news of an important deal with Uber Technologies. As of 1 p.m. EDT, Yandex's stock was trading at $31.57, up 15.5%.

So what

Yandex and ride-hailing giant Uber announced that they had agreed to combine their regional ride-hailing businesses into a new company that Yandex will control. The deal eliminates a key competitor to Yandex's Yandex.Taxi business, and could accelerate the Russian firm's push to make its ride-hailing business profitable.

A Yandex.Taxi vehicle

A Yandex.Taxi. Yandex and Uber will combine their ride-hailing services into a new company. Image source: Yandex.

Yandex will own a majority stake in the new company, 59.3%, and will have four seats on its board of directors. Uber will own 36.6%, with three board seats. The remaining 4.1% will go to employees.

Both Yandex and Uber agreed to invest in the new joint company -- with about $225 million coming from Uber, and $100 million from Yandex. The company's CEO will be Tigran Khudaverdyan, who currently runs Yandex's ride-hailing business.

For Uber, it's another retreat from its global expansion, following its decision to leave China last year -- though it still has upside via its stake in the new company. For Yandex, the deal leaves it the clear leader in Russia and several nearby markets -- and again, is likely to give its ride-hailing operation a push toward sustainable profitability.

The new company will operate in Russia, Armenia, Azerbaijan, Belarus, Georgia, and Kazakhstan.

Now what

Yandex and Uber expect the deal to close in the fourth quarter of 2017. Yandex said that it will consolidate the new company's results in its financial statements once the deal closes.

John Rosevear has no position in any stocks mentioned. The Motley Fool recommends Yandex. The Motley Fool has a disclosure policy.