It’s official. U.S. ride-hailing company Uber is going to sell its Southeast Asia business to rival Grab for an undisclosed amount. Grab will be taking over Uber’s core business and food delivery service Uber Eats in the eight SEA countries it’s operating in, which includes the Philippines. In exchange, Uber gets a 27.5 percent stake in the Singapore-based Grab. Uber CEO Dara Khosrowshahi will also be joining Grab’s board.
The two companies share common investors—SoftBank and Didi—and it’s believed that the merger is seen as a way to improve revenue. Since the competition between the two services has been pretty fierce, each offering discounts and promotions that cut into profit margins.
But of course, there is concern regarding what it would mean with Grab no longer having its main competition out of the market. According to the ride-sharing service, Uber’s app will only be available for the next couple of weeks for their drivers to migrate to Grab’s platform. We are keeping our eyes peeled for updates and we’ve reached out to Uber Philippines and Grab Philippines for any comments.
According to CNBC, there will be no lay-offs as a result of this merger and around 500 Uber employees will be moving to Grab with some staff staying on to handle Uber’s Asia Pacific business.
This isn’t the first time Uber made an international retreat. It sold its China operations to rival Didi Chuxing in 2016 and in 2017, it sold its operations in Russia to rival Yandex for 37% stake in the combined company.
Khosrowshahi refutes claims that Uber is on a consolidation path. In an email sent to its employees, he wrote, “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. The answer is no.”
He adds, “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 move, he explains, puts Uber 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.”