Uber agreed to sell Southeast Asian business to rival Grab

Vastavam web: Ride-hailing firm Uber Technologies Inc [UBER.UL] has agreed to sell its Southeast Asian business to bigger regional rival Grab, sources with knowledge of the matter said on Sunday, in what would be the U.S. company’s second retreat from Asia.The deal, which could be announced as early as Monday, marks the industry’s first big consolidation in Southeast Asia, home to about 640 million people, and puts pressure on rivals such as Indonesia’s Go-Jek, backed by Alphabet Inc’s Google and China’s Tencent Holdings Ltd.

As part of the transaction, Uber would get a stake of as much as 30 percent in the combined business, said a source with direct knowledge of the matter who did not want to be identified as the deal is not yet public.Uber and Singapore-based Grab, Southeast Asia’s biggest ride-hailing firm, declined to comment.

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.Ride-hailing companies throughout Asia have relied on discounts and promotions to attract both riders and drivers in the fast-growing market, driving down profit margins.It is also recovering from a year of scandals that saw co-founder Travis Kalanick forced out as chief executive in June amid U.S. criminal inquiries and a workplace marred by sexual harassment allegations.

SoftBank gained two seats on Uber’s board of directors through its investment and has said it wants the company to focus on growing in the United States, Europe, Latin America and Australia, but not in Asia, due to the lack of profitability.“The economics of that market are not what we want them to be,” he said at the time.

Khosrowshahi, who took over the top job at Uber in August, has been working to clean up the company’s financials ahead taking it public.Still, during a visit to India in February, he pledged to continue investing aggressively in Southeast Asia.Uber’s deal with Grab would be similar to the one struck in China in 2016, when a bruising price war ended in Didi Chuxing buying out Uber’s China business in return for a stake in the company.