Uber, the giant of ride-hailing services, is selling its Southeast Asia business to Grab, its rival in the region, while gaining a substantial stake in the fast growing ride-hailing, financial services and food delivery business.
On Monday, Grab said Uber would take a stake of 27.5% and hold a seat on the board of directors as part of this deal, but no financial details were released.
Since Dara Khosrowshahi became the CEO of Uber in September, he has maneuvered it to make it profitable before its initial public offering that is planned for 2019.
The net loss for the full year at Uber widened in 2017 to $4.5 billion as it suffered several scandals and the departure of former CEO and co-founder Travis Kalanick.
The Grab deal gives Uber the ability to maintain its foothold in an increasingly more affluent market of more than 640 million people while at the same time cutting losses.
Grab has services in Indonesia, Singapore, Malaysia, Vietnam, Thailand, Cambodia, Myanmar, and the Philippines. It said that it offers access to five million agents and drivers and handles more than one billion transactions annually.
For many across Asia, the deal was not good, as many compared the two rivals in search of finding the best available deal.
Uber will no longer be available in two weeks and its drivers must sign up with Grab to drive for them. Riders as well, will have to download the app for Grab and set accounts up although their accounts with Uber will work when outside Southeast Asia.
The two companies said the food delivery company for Uber, known as Uber Eats, would run through May in Southeast Asia and then would become part of the platform GrabFood.
Grab has sought to dominate this region for motorbike and car hailing and expanded into other types of services, recently announcing it plans to partner with a credit card company in Japan to provide credit to millions who do not have bank accounts.
In Indonesia, the largest economy in the region and the region’s most populous nation with over 250 million people, there is a fierce battle for clients with Go-Jek a local app, which has been backed by Tencent and Google.
Anthony Tan, the co-founder and CEO of Grab said that the acquisition of the regional business of Uber is the beginning of a brand new era in mobile businesses that provide food delivery, transport, payments, as well as other financial services throughout the region.
U.S. based Uber has withdrawn its business from several large overseas market. In China, it sold its business to Didi Chuxing, a partner and competitor, taking a new stake in Didi in the process.
In Russia, Uber agreed to merge its business with local search engine giant Yandex which also has a popular app for booking taxis.