Startup Grab To Buy Out Uber In Southeast Asia: Report

Singapore-based startup Grab is in talks to buy out Uber's business in Southeast Asia, CNBC reported Friday, citing people familiar with the negotiations. The U.S. ride-hailing service provider would be compensated in the form of an equity payment granting it a "sizable" stake in Grab. As such, the move is reminiscent of Uber's 2016 sale of its China business to local rival Didi Chuxing which left it with approximately a fifth of the Far Eastern company. Last summer, the San Francisco-based firm opted for a similar transaction in Russia where it consolidated its operations with Yandex in exchange for over a third of the merged business.

As was the case with the previous two sales, Uber's primary motivation for offloading its Southeast Asia unit would be cutting costs. The company burned through $4.5 billion in cash in 2017 alone and while its growth is still on track to eventually outpace its losses if it continues, it's a major obstacle to its ambitions to go public next year. A potential agreement with Grab is all the more likely by virtue of the fact the duo shares a common investor in SoftBank. Whereas the Japanese tech giant became Uber's largest investor earlier this year by taking an approximately 15-percent stake in the company for $9.3 billion, not counting an additional $1.1 billion financial injection, it pumped $2 billion in Grab last summer in partnership with Didi Chuxing at an undisclosed valuation, though one that likely leaves it with close to a controlling stake in the startup. While the Uber investment is believed to have been made through SoftBank's Vision Fund and the money put into Grab came directly from the conglomerate, the end result of these commitments is the same - SoftBank has a vested interest in putting an end to Uber and Grab's price wars in Southeast Asia as it's seeking to lead both companies to long-term profitability.

The sources cited by CNBC weren't able to provide an approximate timeframe on the conclusion of the reported talks between Uber and Grab, suggesting the negotiations themselves are still in a relatively early phase. The ride-hailing startup recently put an end to the largest threat to its public image in the form of the trade secret theft lawsuit filed by Alphabet's Waymo and may become profitable by 2021, according to a previous statement from its CEO Dara Khosrowshahi. Mr. Khosrowshahi recently indirectly dismissed the possibility of Uber exiting more developing countries by saying that continuing its investments in such markets is "the right thing to do."

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Dominik Bosnjak

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Dominik started at AndroidHeadlines in 2016 and is the Head Editor of the site today. He’s approaching his first full decade in the media industry, with his background being primarily in technology, gaming, and entertainment. These days, his focus is more on the political side of the tech game, as well as data privacy issues, with him looking at both of those through the prism of Android. Contact him at [email protected]