Uber is selling its Southeast Asia unit to local rival Grab, the latter announced Sunday, having confirmed the deal that's been rumored about for months now. The development comes several weeks after Uber Chief Executive Officer Dara Khosrowshahi suggested the division in question won't be sold by saying investing in such developing markets "is the right thing to do" when questioned about the possibility of offloading some units that have been incurring significant losses in recent times. No financial details of the transaction have been disclosed by either party, with Grab only revealing Uber is entitled to a 27.5-percent stake in its operations following the conclusion of what's officially labeled a merger and is still pending regulatory approval.
Uber's Southeast Asia business spans eight countries and should allow Grab to dominate all markets save for Indonesia going forward. The startup that's valued at approximately $6 billion or about a tenth of Uber doesn't expect any major antitrust concerns about the transaction to be raised by local regulators. The Uber Eats unit that's presently servicing three Southeast Asian countries is also part of the tie-up, with Grab already pledging to expand its presence in the coming months. Mr. Khosrowshahi is joining Grab's board of directors as part of the consolidation, Grab said. The merger that's the largest such ride-hailing deal in the history of Southeast Asia has been described as the advent of "a new era" by Grab CEO Anthony Tan, with the startup revealing the main Uber app will be discontinued two weeks from now, whereas the Uber Eats one will be integrated into the GrabFood app in late May.
When rumors of a consolidation between the two first emerged, some industry watchers were speculating such a tie-up would be primarily pushed by SoftBank, a major backer of both companies that's keen on seeing its multi-billion investments start making money in the near future instead of continuing to wage endless price wars. China's largest ride-hailing company Didi is also a minority stakeholder of both companies, having received a stake in Uber when it bought out its business in the Far Eastern country in the summer of 2016. Last year, Uber also left Russia where it ceded its operations to local rival Yandex, with all moves being interpreted as attempts to streamline the company's operations and exit most markets that are incurring heavy losses due to fierce competition. Following the consolidation, Go-Jek will be Grab's last remaining rival in the region, albeit the Jakarta-based firm only operates in its home country of Indonesia and its international ambitions remain unclear.