It looks like Uber may soon merge with Southeast Asia’s Grab, according to a CNBC report on Saturday (Feb. 17).
According to CNBC, “Uber is preparing to sell its Southeast Asia business to Singapore’s Grab in exchange for a sizable stake in the company.”
The report came from two sources who chose to remain anonymous due to the confidentiality of the transactions between the two ride-hailing app giants.
In December, Japanese tech company SoftBank bought about 15 percent of stakes from Uber’s existing investors and it looks like Uber wants a bigger slice of their deal.
Sources told CNBC that this move is part of Uber’s plan to recover its “battered reputation”, make the business more financially disciplined, and turn out profits after having its operations suspended in certain Southeast Asian cities.
In 2017, Uber’s losses went up to 61 percent amounting to US $4.5 billion. Uber CEO Dara Khosrowshahi explained how they simply have a hard time competing with local transportation operators.
“I think the team ran through an inventory of where we competed, and if we compete on let’s say even on a dollar-for-dollar basis against the local player, paying the same amount to drivers, collecting the same amount from riders, in general where we are now is, if both players are kind of spending equally we tend to win share,” Khosrowshahi said at the Goldman Sachs Technology and Internet Conference in San Francisco earlier this week.
“We’ve got a better brand, we’ve got better technology, better network, etc. Whatever it is, we tend to win share. There’s certain markets, China and Russia, where that wasn’t true. And if your only competitive advantage, or the only reason you can be in a market is because you can spend money, that’s not exactly a reasonable proposition,” Khosrowshahi adds.
However, this isn’t the first time Uber to sold part of its ownership. In China, local company Didi owns 20 percent; while in Russia, Yandex owns 37 percent of the business.
If Uber’s deal with Grab pushes through, this will make SoftBank an even bigger player in the ride-hailing/sharing industry. It already owns shares in Didi, India’s Ola, and Brazil’s 99, according to CNBC.
The companies have not reached a final agreement yet and there’s no timeframe as to when it will finalized. Both Uber and Grab have not issued a statement about the report.
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