Uber has sold its Southeast Asian business to rival Grab, agreeing to take a 27.5% share of the business.
As first reported by Bloomberg, but since confirmed by both businesses, Uber will sell both its ride-hailing and on-demand food delivery service Uber Eats to Grab.
Grab's website now has a section on its website under the theme of #ComingTogether which aims to educate both riders and drivers about what the merger means for them.
As a result, Grab will take over the Uber Eats service immediately, allowing Grab to expand its GrabFood brand outside Thailand and Indonesia by the second quarter. Adding Uber Eats to its business helps accelerates its plans to become more than a ride sharing business.
Removing the competition between Uber and Grab will likely set prices higher in many markets in Southeast Asia as prices had been consistently dropping as the two companies battled to win users. Grab will also be able to focus on other local competitors, such as Indonesia’s Go-Jek.
For Uber, the deal will allow it to focus on profitability in core markets, versus price battles around the globe as it seeks better financial results ahead of a rumoured IPO next year. Last year Uber bowed out of China, conceding to local rival Didi Chuxing.
Many have cited Japanese technology giant Softbank’s ubiquitous presence as an investor of ride-sharing businesses as a key driver of consolidation. Just last month Didi Chuxing signed a new deal with Softbank, while it owns shares in Uber, Grab and Indian brand Ola. With these huge businesses hemorrhaging investment as they seek to become number one, consolidation is necessary to improve the ability to make any money.