Singapore’s ride-hailing major Grab on Monday announced that it has acquired Uber’s Southeast Asia operations, including ridesharing and food delivery business in the region. Uber CEO Dara Khosrowshahi will join Grab’s board.
In a statement, Grab said this is the largest acquisition by a Southeast Asian internet firm. No financial terms were disclosed.
“Today’s acquisition marks the beginning of a new era. The combined business is the leader in platform and cost efficiency in the region. Together with Uber, we are now in an even better position to fulfil our promise to outserve our customers. Their trust in us as a transport brand allows us to look towards the next step as a company: improving people’s lives through food, payments and financial services,” said Grab co-founder and Group CEO Anthony Tan.
Under the agreement, Grab will take over Uber’s operations and assets in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. The deal marks an exit for Uber from yet another market. It has previously ceded China to ride-hailing leader Didi Chuxing, also an investor in Grab, in 2016 in return for a 17.5 per cent stake. The American firm later sold its Russian business to Yandex.
In an email to Uber employees about the agreement, Khosrowshahi said, “One of the potential dangers of our global strategy is that we take on too many battles across too many fronts and with too many competitors. This transaction now puts us in a position to compete with real focus and weight in the core markets where we operate, while giving us valuable and growing equity stakes in a number of big and important markets where we don’t.”
However, the payoff may not be too bad for Uber. “After investing $700 million in the region, we will hold a stake worth several billion dollars, and strategic ownership in what we believe will be the winner in an important global region,” Khosrowshahi noted in his email.
Grab is confident of gaining regulatory approval for the deal. “Grab believes the acquisition will add to, among others, vibrant and competitive ride-hailing, delivery and transportation spaces, and it will make a merger notification to the Competition Commission of Singapore,” it said.
The merger excludes Uber’s car rental subsidiary, Lion City Rentals, a Grab spokesperson said. Uber had sold a 51 per cent stake in LCR to the city-state’s largest taxi operator ComfortDelGro last year. That deal underwent a comprehensive review by the Competition Commission.
Speculation about the merger gained ground after Grab’s early backer SoftBank Group Corp acquired a nearly 15 per cent stake in Uber in January. The move is seen as an attempt to stem costs at the American firm before it heads to the public markets for an IPO that could happen as early as next year.
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