Global ride-hailing major Uber has reportedly agreed to sell its Southeast Asian business to its regional rival in the area Grab. This deal marks Uber’s second exit in an Asian market after it ceded operations to Didi Chuxing in China in 2016.
Grab will merge Uber’s ride-hailing and food delivery business with its operations, giving Uber a 27.5% stake in Grab. The deal will also see Uber CEO Dara Khosrowshahi joining the board of Grab.
According to a CNBC report, Uber's app will run for two weeks to give existing drivers time to move onto the Grab platform, while the Uber Eats app will continue till end of May.
Grab will then reportedly expand its food delivery business GrabFood from Indonesia and Thailand to Singapore and Malaysia.
Softbank, which recently pumped in over a billion dollars into Uber reportedly pushed for consolidation to improve the profitability of the San Francisco-based ride hailing major.
For Softbank, the deal will help it ‘double down’ on its plans for growth and invest in products and technology.
As per a Reuters report, Uber invested $700 million in its Southeast Asia business, less than the $2 billion it burned through in China before ceding its operations there to Didi.
This deal will give Grab a strong holding in Southeast Asia, giving tough competition to its Indonesian rival Go-Jek, which is backed by Google and Tencent Holdings. The merging of Uber Eats will further give Grab an advantage over Go-Jek, which also has a vast range of services apart from ride hailing. In its largest market Indonesia, it also offers services such as digital payments, food delivery and on-demand cleaning and body massage.
As Uber prepares for its Initial Public Offering (IPO), CEO Khosrowshahi has been trying to clean up the company’s financials. He had stated before that Uber might pull out of loss-making markets to reduce burn and boost profitability.