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Uber is selling its South East Asia operations to rival Grab Uber sells South East Asia operations to rival Grab
(about 4 hours later)
Uber is selling its South East Asia ride-share and food delivery businesses to regional rival Grab.Uber is selling its South East Asia ride-share and food delivery businesses to regional rival Grab.
The move marks a further retreat from international operations for Uber, after it sold its China business to local rival Didi Chuxing in 2016. The move marks a further retreat from international operations for Uber, after it sold its China business to local rival Didi Chuxing.
Both firms are describing the deal as a win for both their companies and their passengers. Both firms describe the deal as a win for their passengers, but analysts warn it could mean higher prices.
Grab is South East Asia's most popular ride-sharing firm with millions of users across eight countries.Grab is South East Asia's most popular ride-sharing firm with millions of users across eight countries.
Uber will retain a 27.5% stake in the Singapore-based company. Uber's chief executive will also join Grab's board. Under the terms of the deal, Uber will take a 27.5% stake in Singapore-based Grab. Uber's chief executive, Dara Khosrowshahi, will also join Grab's board.
The value of the deal has not been made public.The value of the deal has not been made public.
But it includes the sale of all of Uber's operations in the region, including food delivery service Uber Eats. Grab's chief executive Anthony Tan said the deal "marks the beginning of a new era" in which the merged business would be better placed to serve customers.
Uber's chief executive Dara Khosrowshahi said this was "a testament to Uber's exceptional growth across South East Asia over the last five years". Uber's Mr Khosrowshahi said the deal would "help us double down on our plans for growth as we invest heavily in our products and technology".
"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." The deal marks Uber's third retreat after it withdrew from China in 2016 and sold its Russia business to local firm Yandex last year.
Grab's chief executive Anthony Tan said the acquisition "marks the beginning of a new era". Yet in a note to staff, Mr Khosrowshahi said that consolidation was not the "strategy of the day".
"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." He did, however, acknowledge the threat from competition.
Revenue hit by rivalry "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," he said.
Less choice?
Mr Khosrowshahi has been preparing the firm for an initial public offering in 2019.
Uber invested $700m in its Southeast Asia business and another $2bn in China before it sold its operations there.
In November, Mr Khosrowshahi, said the company's Asian operations were not going to be "profitable any time soon".
Last year, Uber lost $4.5bn (£3.2bn) - and its chief executive - as it underwent a fundamental shake-up following a harassment scandal.
But some fear that its withdrawal from South East Asia could result in higher prices for users there.
"Industry consolidation will mean fewer choices for commuters and fares are likely to trend higher over time," said Corrine Png, a transport analyst from Singapore-based research firm Crucial Perspective.
Competition in the ride-hailing sector has been fierce, resulting in discounts and promotions offered to riders and drivers reducing profit margins.Competition in the ride-hailing sector has been fierce, resulting in discounts and promotions offered to riders and drivers reducing profit margins.
But consolidation in the industry was widely expected after Japan's Softbank Group made a large investment in Uber earlier this year. But consolidation in the industry was widely expected after Japan's Softbank Group made a large investment in Uber last year.
SoftBank is a major investor in several of Uber's rivals including Grab, China's Didi Chuxing and India's Ola.SoftBank is a major investor in several of Uber's rivals including Grab, China's Didi Chuxing and India's Ola.
It is believed to have pushed for consolidation in order to improve revenues.It is believed to have pushed for consolidation in order to improve revenues.
Grab operates in eight countries including Singapore, Malaysia, Indonesia and Vietnam. Grab currently operates in eight countries including Singapore, Malaysia, Indonesia and Vietnam.
In an interview with the BBC in February, Grab's boss said the firm wanted to become more relevant to users' everyday lives and planned to expand its food delivery service. The deal - which is yet to be approved by local regulators - includes the sale of all of Uber's operations in the region, including its key food delivery service Uber Eats.
"We want to be that app that allows you to buy your coffee, earn your rewards and then after that, you want to buy your lunch and order in, have your food delivered so you don't have to go through the traffic jam," Mr Tan said. As a result of the merger, the GrabFood service will expand from two to four South East Asian countries by next quarter, Grab said.
"And when you're that relevant, that real to every customer across the 600 million base, then you create huge value." The company said the deal would help it move towards profitability, and would also help to increase "adoption of the GrabPay mobile wallet and support Grab's growing Financial Services platform".
As a result of the merger, the GrabFood service will expand from two to four South East Asian countries by next quarter, Grab said in statement.
"This will be another great use case to drive continued adoption of the GrabPay mobile wallet and support Grab's growing Financial Services platform," the firm said.
Grab added that the acquisition would accelerate its path to profitability.
Last year, Uber lost $4.5bn (£3.2bn) - and its chief executive - as it underwent a fundamental shake-up following a harassment scandal.
In November, Uber's Dara Khosrowshahi, said the company's Asia operations were not going to be "profitable any time soon" and said he would like to see some changes.
The firm has also exited its Russian business, selling to local firm Yandex.