Uber Agrees on Southeast Asian Sale to Grab: sources
SINGAPORE (Reuters): Uber Technologies Inc. has reached an agreement to sell its Southeast Asian ride-hailing business to bigger regional rival Grab and could announce the deal as early as Monday morning, sources familiar with the matter said.
As part of the transaction, Uber would get a stake of as much as 30 percent in the combined business, said a source with direct knowledge of the matter who did not want to be identified as the deal is not yet public.
Another source familiar with the deal said Uber would acquire a 25 percent to 30 percent stake in Grab, valuing the entire business at $6 billion, the same valuation it commanded in its most recent capital raising.
Uber and Singapore-based Grab, Southeast Asia’s biggest ride-hailing firm, declined to comment.
Expectations of consolidation in Asia’s fiercely competitive ride-hailing industry were stoked earlier this year when Japan’s SoftBank Group Corp made a multi-billion dollar investment in Uber.
Ride-hailing companies throughout Asia have relied on discounts and promotions to attract both riders and drivers in the fast-growing market, driving down profit margins.
SoftBank gained two seats on Uber’s board of directors through its investment and has said it wants the company to focus on growing in the United States, Europe, Latin America, and Australia, but not in Asia, due to the lack of profitability.
Uber’s CEO Dara Khosrowshahi said at a conference in New York in November that the company’s Asia operations were not going to be “profitable anytime soon”, particularly because of how heavily Uber was subsidizing rides there.
“The economics of that market are not what we want them to be,” he said at the time.
Still, during a visit to India in February, he pledged to continue investing aggressively in Southeast Asia.
Now that Uber is pulling out of Southeast Asia, attention may turn to the company’s operations in India, which accounts for more than 10 percent of Uber’s trips globally, but is not making money yet.
Uber’s deal with Grab would be similar to the one struck in China in 2016 when a bruising price war ended in Didi Chuxing buying out Uber’s China business in return for a stake in the company.
Grab raised about $2.5 billion last July from Didi, SoftBank and others in a deal valuing the company at around $6 billion. Bloomberg first reported the deal.