Uber is selling its South-East Asian business to regional rival Grab in what is the company’s second retreat from Asia in a move similar to it’s exit from China in 2016, when a price war ended with Chinese rival Didi Chuxing buying out Uber’s China business in return for a stake in the company.
As part of the transaction with Grab, Uber will take a stake of 27.5 percent in the Southeast Asian company, Grab said in a statement. The deal values the business at $6 billion (the same valuation set in its most recent investment) raise and as part of the deal Uber CEO Dara Khosrowshahi will take a seat on Grab’s board.
This transaction comes as no surprise as consolidation in the industry was anticipated after Softbank made a large investment in Uber earlier this year.
SoftBank is a major investor in several of Uber’s rivals including Grab, China’s Didi Chuxing and India’s Ola.
Competition in the ride-hailing sector has been intense, resulting in discounts and promotions offered to riders and drivers reducing profit margins. Softbank is believed to have pushed for consolidation in order to improve revenues and Uber is widely expected to IPO in 2019, so no doubt are working hard to ensure their IPO prospectus is more attractive reading.
Grab is South East Asia’s most popular ride-sharing firm with millions of users across eight countries including Singapore, Malaysia, Indonesia and Vietnam.
Uber’s exit from SE Asia is the industry’s first big consolidation in the region and will increase pressure on rivals such as Indonesia’s Go-Jek, backed by Alphabet Inc’s Google and China’s Tencent Holdings in the fight to be number one player in a region with a population of 640 million people
Grab’s CEO Anthony Tan has previously stated his intention to lead the company to become more relevant to users’ every day lives and therefore he plans to add food delivery to their products. Which will now happen given Uber Eats operations in the region will be part of the deal.
He commented “We want to be that app that allows you to buy your coffee, earn your rewards and then after that, you want to buy your lunch and order in, have your food delivered so you don’t have to go through the traffic jam and when you’re that relevant, that real to every customer across the 600 million base, then you create huge value”.
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