This time the entire limelight has been hogged by Uber. The reason being the striking news that Uber would be selling its South East Asia ride-share and food delivery businesses to its bigger regional rival Grab, as per stated by the source and this would be the US company’s second retreat from Asia.
This deal, which, in all probability could be announced on Monday, paves the way for industry’s first big consolidation in Southeast Asia, thus putting pressure on rivals such as Indonesia’s Go-Jek, backed by Alphabet Inc’s Google and China’s Tencent Holdings Ltd.
Also, as the sources reveal, a part of the transaction also promises Uber a stake of as much as 30 percent in the combined business.
Another source familiar with the deal added that Uber would be also acquiring a 25 percent to 30 percent stake in Grab, valuing the entire business at $6 billion, and this would be the same valuation it commanded in its most recent capital raising.
Expectations of consolidation in Asia’s fiercely competitive ride-hailing industry had been initiated earlier this year when Japan’s SoftBank Group Corp had made a multi-billion dollar investment in Uber.
SoftBank, in fact, is also one of the main investors in several of Uber’s rivals, including Grab, China’s Didi Chuxing, and India’s Ola.
For Uber, it has been making a hard attempt of recovering from a year of scandals that saw co-founder Travis Kalanick forced out as chief executive in June amid U.S. criminal inquiries.
Uber’s CEO Dara Khosrowshahi regarded at a conference in New York in November that the company’s Asia operations were not going to be “profitable anytime soon,” the reason being how heavily Uber was subsidizing rides there. To this, he stated that “The economics of that market is not what we want them to be”.
Now that Uber is pulling out of Southeast Asia, attention might turn to the company’s operations in India, which accounts for more than 10 percent of Uber’s trips globally, but is not making any money yet.