Uber Backs Out Of Southeast Asia, Selling To Regional Rival 'Grab'

Uber chief Dara Khosrowshahi has been pushing to clean up the company’s financials in preparations for an initial public offering next year

With the Uber purchase, Grab will look to expand its GrabFood food delivery business with the integration of UberEats, making the service available across "all major Southeast Asian countries" within the coming months, starting with Singapore and Malaysia. The value of the deal remains undisclosed.

In a statement by Grab CEO, Anthony Tan said, "Today's acquisition marks the beginning of a new era".

According to mobile data analytics firm App Annie, Grab was ranked fifth among top apps based on monthly active users in Singapore in 2017 versus Uber at No.7.

But Grab, which operates in 195 cities in eight Southeast Asian countries, became the dominant force in ride-hailing, leaving its troubled U.S. rival struggling.

Uber CEO Dara Khosrowshahi has been putting efforts to improve the company's financial status which has recorded several losses recently.

Reuters writes: "For Grab, the deal is a boon for its meal-delivery service, which will now merge with Uber Eats". Grab declared that Uber will partake a 27.5 percent stake and a position on its board as far as the deal is concerned.

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Grab (founded in 2012) is now present in 195 cities in eight Southeast Asian countries (Singapore, Malaysia, Indonesia, Philippines, Vietnam, Thailand, Myanmar, and Cambodia) and offers the widest range of on-demand transport services including private cars, motorbikes, taxis, and carpooling services, in addition to food and package delivery services.

Uber invested $700 million in its Southeast Asia business, less than the $2 billion it burned through in China before ceding its operations there to Didi.

But the most important point is about the margins on rides hailed across Southeast Asia, which are likely very low.

In Thailand, ride-hailing services by privately owned vehicles are illegal but many drivers work with both Uber and Grab.

Office workers walk past Grab and Uber offices on Monday.

"A lot of people are used to using Uber, Grab isn't strong yet, Uber is stronger.Grab just arrived", said Krem Sokhom. This exit may suggest that Uber is depending on its success in North America markets and would not put up similar fights outside its local base. The US firm has taken 5.89 per cent stake in Didi.

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