Although this is Uber’s second such retreat from Southeast Asia, the deal suggests that Uber is taking a defensive positioning for a potential counter-offensive especially with its CEO Khosrowshahi gaining a foothold in Grab’s board.
On Monday, in a move that marks Uber Technologies Inc’s second retreat from the Asian, the ride services firm has decided to sells its Southeast Asian business to Grab, a dominant peer in the region.
The deal also marks the industry’s first big consolidation in Southeast Asia, which is home to nearly 640 million people. The move will also pressure Go-Jek, Uber’s peer in Indonesia which has the backing of China’s Tencent Holdings Ltd and Alphabet Inc’s Google.
As part of the deal, Uber’s CEO, Dara Khosrowshahi will join Grab’s board and it will take a 27.5% stake in the firm.
Incidentally, Japan’s SoftBank Group Corp is one of the main investors in Grab; it has also spread its investments in other ride-hailing firms in the region including in China’s Didi Chuxing and India’s Ola.
Significantly, Uber is also preparing for a potential initial public offering in 2019; it lost a whopping $4.5 billion in 2017 and is facing stiff competition at home and in Asia midst a regulatory crackdown in Europe.
“It will help us double down on our plans for growth as we invest heavily in our products and technology,” said Khosrowshahi in a statement.
Grab stated it will take control of Uber’s assets and operations in 8 countries in the region and will expand its food delivery services.