Uber announced on Sunday that it would be selling its Southeast Asia ride and food-delivery businesses to Grab – Uber’s rival based out of Singapore. This step is taken by Uber to prop up its finances and shift focus on its business ahead of the public listing. In exchange for this deal, Uber will acquire a 27.5 percent stake in Grab. Additionally, Uber’s chief executive, Dara Khosrowshahi, will be joining Grab’s board.
According to an email sent by CEO Khosrowshahi to the employees, 500 employees will transition to Grab, and their customer base will be moved to Grab’s apps.
“It is fair to ask whether consolidation is now the strategy of the day,” Mr. Khosrowshahi wrote in the email to staff. “The answer is no.” He continued: “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.”
This wouldn’t be the first time that Uber retreated from a market. Over a year ago, Uber relinquished control over the Chinese market to its rival Didi Chuxing. Last year, it was Russia and the Caucasus via a merger with Yandex.
“It was something I dreamt about for sure,” said Grab co-founder and CEO Anthony Tan in an interview with CNBC. Tan also admitted that winning doesn’t always come easy. “Of course there was debate,” he said about whether giving up 27.5 percent of the company to Uber was the right amount.
SoftBank, the Japanese investor who has invested heavily in Uber has also invested in quite a few of its competitors, which includes Grab in Southeast Asia, Ola in India and Didi Chuxing in China.
In an interview, Grab’s president, Ming Maa, stated that this deal with Uber would help the company get closer to profitability. However, he declined to give specific information.
Grab started in 2012 and currently, it operates its services in eight Southeast Asian countries including Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. With a widely expanding network, the company aims to be more than just a transport provider.