Uber has been trying hard to regain its lost sheen in past couple of months. To manage this the ride-hailing firm Uber Technologies Inc. has agreed to sell its Southeast Asian business to bigger regional rival Grab, the firms said in a statement on Monday, marking the U.S. company’s second retreat from an Asian market.
The deal will account for the industry’s first big consolidation in Southeast Asia, which possesses a huge potential for all the ride hailing companies, and puts pressure on Indonesia’s Go-Jek, which is backed by Alphabet Inc’s Google and China’s Tencent Holdings Ltd.
Speaking of the development, Khosrowshahi said in a statement,
“It will help us double down on our plans for growth as we invest heavily in our products and technology,”
He further added while sharing a note to his employees,
“It is fair to ask whether consolidation is now the strategy of the day, given this is the third deal of its kind … The answer is no,”
A shake-up in Asia’s fiercely competitive ride-hailing industry became likely earlier this year when Japan-based SoftBank Group Corp’s Vision Fund made a multi-billion dollar investment in Uber. SoftBank also invested in Grab. As part of the transaction, Uber will take a 27.5 percent stake in Singapore-based Grab and Uber CEO Dara Khosrowshahi will join Grab’s board.
Uber, which is preparing for a potential initial public offering in 2019, lost USD 4.5 billion last year and is facing fierce competition at home and in Asia, as well as a regulatory crackdown in Europe.
Uber’s two previous retreats, from China and Russia, happened under former CEO Travis Kalanick. The deal with Grab is the first operations sale by Khosrowshahi, who started in September. Uber includes the United States, Australia, New Zealand and Latin America among its core markets – regions where it has more than 50 percent market share and is profitable or sees a path to profitability.