Having already exited the Chinese and Russian markets due to the strength of local competitors, ridesharing service Uber says it’s pulling out of the Southeast Asian market, too.
Announced on Monday morning, March 26, Uber has agreed to sell its ridesharing business in Southeast Asia to its main competitor in the region, Grab, which is backed by Japanese telecoms giant SoftBank and Didi Chuxing, the leading ridesharing firm in China. Its UberEATS meal-delivery operation is also part of the deal.
Founded in Singapore in 2012, Grab operates across eight countries, including Singapore, Malaysia, Thailand, Indonesia, and Vietnam. The Uber app will work for two more weeks, giving drivers a chance to sign up to Grab.
In a deal similar in many ways to those inked with rivals in China and Russia over the last two years, Uber will get a 27.5 percent stake in Grab. The value of this stake hasn’t been identified but it is believed to be worth several billion dollars. Five hundred Uber employees will also be offered positions with Grab, and Uber CEO Dara Khosrowshahi will get a seat on Grab’s board.
In an email to staff seen by Recode, Khosrowshahi insisted the move allowed the San Francisco-based company to concentrate its efforts on its main markets while retaining the opprtunity to make money in the places that it has left behind.
“It is fair to ask whether consolidation is now the strategy of the day, given this is the third deal of its kind, from China to Russia and now Southeast Asia,” Khosrowshahi said in the email. “The answer is no. 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.” Uber’s CEO said this latest deal “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.”
The company was known to be losing huge amounts of money in these markets, prompting it to strike deals with powerful local operators that cost it its operation in those places but at the same time gave it a stake in each of the businesses. After SoftBank invested in Uber last year to become its biggest backer, the Japanese company had reportedly been pushing for further consolidation to help boost revenues. Monday’s news indicates it has gotten its wish.
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