Uber Agrees to Sell Its Operations in Southeast Asia to Competitor Grab
Uber has reached an unofficial agreement to sell off its operations in Southeast Asia to its top competitor in the region, ride-hailing company Grab.
The exact details of the agreement are still being negotiated, but under the current terms, insiders say Uber would sell its operations in the region for a 30% stake in Grab, The Wall Street Journal reports. The deal would mean the end of a costly effort by Uber to compete with Grab and an Indonesian-based motorcycle ride-hailing company, Go-Jek. Uber was reportedly spending $200 million per year to compete in the Southeast Asian market.
Any agreement between the two companies would have to be approved by regulators, and people familiar with the negotiations tell the Journal that Uber's stake in Grab might end up being less than 30%. Additionally, the final version of the deal might exclude small parts of Uber's Southeast Asian business. TPG reached out to Grab for comment but did not receive an immediate response. Uber had no comment.
In February, Uber CEO Dara Khosrowshahi said the company would invest hundreds of millions of dollars in the market, but he also said he predicted losses to the bottomline going up against the region's local start-ups. "The economics of that market are not what we want them to be," Khosrowshahi said on a trip to New Dehli, according to the Journal. "We expect to lose money in Southeast Asia and expect to invest aggressively in terms of marketing, subsidies."
A 2017 report by the consultant firm Bain found that users in the region prefer Grab to Uber.
This is not the first regional selloff for Uber. In 2016, the ride-hailing company sold its operations in China to Didi Chuxing Technology Co., and it gained a 20% stake of the company in that deal. Uber also merged its Russian business with the region's Yandex.Taxi and acquired 37% of that firm.
A recent study by Google and Temasek Holdings predicts that Southeast Asia's ride-hailing market will be worth $13.1 billion by 2025.
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