Singapore-based ride-hailing company Grab has announced the purchase of Uber’s operations in Southeast Asia, ending months of speculation.
The deal sees Grab take control of Uber’s operations and assets in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam in return for a 27.5% stake in the new combined business. Uber CEO Dara Khosrowshahi will also join Grab’s board.
Grab co-founder Anthony Tan described the deal as a proud achievement for a local startup.
“We are humbled that a company born in SEA has built one of the largest platforms that millions of consumers use daily and provides income opportunities to over 5 million people.
Today’s acquisition marks the beginning of a new era,” he said in a statement that reaffirmed the company’s commitment to expanding its finance and transportation operations, while announcing that its food delivery service GrabFood would launch in Malaysia and Singapore following its integration with UberEats.
“The combined business is the leader in platform and cost efficiency in the region. Together with Uber, we are now in an even better position to fulfil our promise to outserve our customers,” Tan added. “Their trust in us as a transport brand allows us to look towards the next step as a company: improving people’s lives through food, payments and financial services.”
Meanwhile, Uber CEO Dara Khosrowshahi deflected criticism that the US company failed to adequately adapt its business model to local markets by describing the deal as evidence of “Uber’s exceptional growth across Southeast Asia over the last five years”.
“It will help us double down on our plans for growth as we invest heavily in our products and technology to create the best customer experience on the planet,” he said in a statement. “We’re excited to take this step with Anthony and his entire team at Grab, and look forward to Grab’s future in Southeast Asia.”
The deal marks the second time Uber has retreated from a market in this way. In 2016, Chinese ride-hailing service Didi Chuxing bought out its American rival’s business in China in exchange for a stake in its company.
And, according to the Financial Times, the deal could pave the way for a similar departure in India, where Uber has met with fierce competition from local rivals Ola. Khosrowshahi, however, has publicly ruled out such a move.
Rumours of a merger between Grab and Uber began circulating late last year after the Japanese conglomerate Softbank, already a major investor in Grab, invested $9.3bn in the US-based ride-hailing app.
Since then, Softbank, which also owns shares in Didi Chuxing, has advocated consolidation as a means of boosting Uber’s profitability ahead of a proposed initial public offering sometime next year.
Currently operating in 190 cities, Grab is valued at $6 billion, according to CB Insights. Uber’s latest funding valued the US company at $54 billion.
According to a joint research report by Google and Singapore sovereign wealth fund Temasek, the region’s ride-hailing market is forecast to be worth $20.1 billion by 2025.