AFTER weeks of rumoring and speculation, US ride-hailing giant Uber Technologies Inc. has finally announced the sale of its Southeast Asian operations to regional rival Grab.
The firms confirmed the sale in a statement on Monday, marking the US company’s second retreat from an Asian market.
The sale includes all of Uber’s operations in Southeast Asia, as well as Uber Eats in the region, according to Bloomberg. The deal provides the US company a 27.5 percent stake in the combined business, with Uber CEO Dara Khosrowshahi joining Grab’s board.
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The merger marks the industry’s first big consolidation in Southeast Asia, home to about 640 million people, and puts pressure on Indonesia’s Go-Jek, which is backed by Alphabet Inc’s Google and China’s Tencent Holdings Ltd.
Expectations of consolidation in Asia’s fiercely competitive ride-hailing industry were stoked earlier this year when Japan’s SoftBank Group Corp made a multi-billion dollar investment in Uber.
SoftBank is also one of the main investors in several other big ride-hailing firms including Grab, China’s Didi Chuxing, and India’s Ola.
Ride-hailing companies throughout Asia have relied heavily on discounts and promotions, driving down profit margins.
Grab has more than 81 million mobile app downloads, offering services in 178 cities across Singapore, Indonesia, the Philippines, Malaysia, Thailand, Vietnam, Burma, and Cambodia. According to CB Insights, the Singapore-based company was recently valued at US$6 billion.
Uber, which is preparing for a potential initial public offering in 2019, lost US$4.5 billion last year and has faced fierce competition at home and in Asia, as well as a regulatory crackdown in Europe.
“It will help us double down on our plans for growth as we invest heavily in our products and technology,” Khosrowshahi said in a statement.
Grab said it will take over Uber’s operations and assets in eight countries in the region, and will expand its food delivery services.
Grab co-founder and CEO Anthony Tan was quoted as saying the truce would bring to an end the leadership battle in a Southeast Asian ride-hailing market expected to reach US$20.1 billion by 2025.
This article was originally published on our sister website Tech Wire Asia. Additional reporting by Reuters.