Uber is selling its South East Asia ride-share and food delivery businesses to regional rival Grab. Uber won’t receive any cash from the sale. Instead, it will get a 27.5% stake.
Facts of the Deal:
There will be no cash for Uber. Instead, it will get a 27.5% stake — worth several billion dollars — in Singapore-based Grab. Grab was most recently valued at $6 billion. Further, Uber CEO Dara Khosrowshahi will join Grab’s board.
Uber’s services in the region — including ride hailing and UberEats — will be available for the next two weeks via the Uber app. After that, passengers will need to download Grab’s app or that of another local ride hailing firm.
The deal is the industry’s first big consolidation in Southeast Asia, home to about 640 million people, and puts pressure on Indonesia’s Go-Jek, which is backed by Alphabet Inc’s Google and China’s Tencent Holdings Ltd.
For Grab, the deal is a boon for its meal-delivery service, which will now merge with Uber Eats.
Competition in the ride-hailing sector has been fierce, resulting in discounts and promotions offered to riders and drivers reducing profit margins. Consolidation in the industry was widely expected after Japan’s Softbank Group made a large investment in Uber last year.
SoftBank is a major investor in several of Uber’s rivals including Grab, China’s Didi Chuxing and India’s Ola.
Uber, which is preparing for a potential initial public offering in 2019, lost $4.5 billion last year and is facing fierce competition at home and in Asia, as well as a regulatory crackdown in Europe.
This move marks a further retreat from international operations for Uber, after it sold its China business to local rival Didi Chuxing.
While Uber is exiting Southeast Asia, it is still locked in an expensive battle in India against local rival Ola — another company in which SoftBank holds a big stake.