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It’s official. Uber is giving up on its operations in Southeast Asia, opting instead to sell off to its biggest competitor in the market, Grab.
The two ride-sharing companies had unofficially agreed to a deal earlier in March, and they both confirmed the details of the agreement Monday. In exchange for its operations and assets in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, Uber will get a 27.5% stake in Singapore-based Grab (a stake worth several billion dollars, according to Uber), and about 500 employees will transition to Grab as well. The deal also includes the food delivery venture UberEats, and it means that Uber CEO Dara Khosrowshahi will join Grab’s board.
The deal, which Grab says is the largest ever of its kind in Southeast Asia, means the end of a costly effort by Uber to find a foothold in the region. The company invested about $700 million competing with the area’s local startups. In February, Khosrowshahi noted he expected to lose money in the region as the company tried to compete, The Wall Street Journal reported. A 2017 report by the consultant firm Bain found that users in the region prefer Grab to Uber.
“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,” Khosrowshahi said Monday in an email to Uber staff. “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.”
This is not Uber’s first regional selloff. In 2016, the San Francisco-based 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’snd acquired 37% of that firm.
Featured image by Jaap Arriens/NurPhoto via Getty Images.
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