Grab announced today that it has acquired Uber’s Southeast Asia operations, ending speculation about reports of the merger that surfaced over the weekend, simultaneously ending a fierce market share in the region.
Grab said it will integrate Uber’s ride-sharing and food delivery business in the region into its platform.
“This deal is the largest-ever of its kind in Southeast Asia,” ride-hailing service Grab said in a media release on Monday.
“With the combined business, Grab will drive towards becoming the number one online-to-offline mobile platform in Southeast Asia and a major player in food delivery.”
Passengers “can expect better service with more drivers and transport options available in one app”.
As part of the acquisition, Uber will take a 27.5 per cent stake in Grab and Uber CEO Dara Khosrowshahi will join Grab’s board.
It will take over Uber’s operations and assets in eight countries in the region. There are Singapore, Malaysia, Cambodia, Indonesia, Myanmar, the Philippines, Thailand and Vietnam.
Grab president Ming Maa told Reuters on Monday that the deal was closed and the firm was in touch with regulators to address any concerns.
He added that the deal was “a very independent decision by both companies” and was “highly” supported by their common investor, Japan’s SoftBank Group.
Mr Anthony Tan, group CEO and co-founder of Grab said: “We are humbled that a company born in Southeast Asia has built one of the largest platforms that millions of consumers use daily and provides income opportunities to over 5 million people.
“Today’s acquisition marks the beginning of a new era. The combined business is the leader in platform and cost efficiency in the region.”
Uber chief Mr Khosrowshahi added: “This deal is a testament to Uber’s exceptional growth across South-east Asia over the last five years. It will help us double down on our plans for growth as we invest heavily in our products and technology to create the best customer experience on the planet.”
We’d like to share some exciting news with you! Uber will be joining Grab in Singapore and across Southeast Asia, as…
Ms Tan Hooi Ling, co-founder of Grab said they will expand GrabFood into all major Southeast Asia countries by the first half of 2018.
“GrabFood will also be another great use case to drive the continued adoption of GrabPay mobile wallet and support our growing financial services platform,” she said.
“To minimise disruption, Grab and Uber are working together to promptly migrate Uber drivers and riders, Uber Eats customers, merchant partners and delivery partners to the Grab platform.”
Grab also said that it will continue to grow its core transportation offerings and while expanding its financial offerings such as mobile payments, micro-financing and insurance.
“GrabPay as a mobile wallet will be available across all major Southeast Asian countries by the end of the year,” it said.
We’re excited to take this step with Anthony and his entire team at Grab, and look forward to Grab’s future in Southeast Asia,” said Uber CEO Dara Khosrowshahi.
The deal 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.
With Uber’s news of pulling out of Southeast Asia cemented, attention may now turn to the company’s operations in India, which accounts for more than 10 percent of Uber’s trips globally, but is not making money yet.
Uber’s deal with Grab is 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. Grab raised about US$2.5 billion last July from Didi, SoftBank and others in a deal valuing the company at around US$6 billion.
Bloomberg first reported the deal.
CUSTOMERS, SERVICE-PROVIDERS TO BE MIGRATED TO GRAB
In the media release, Grab said Uber drivers and riders, as well as Uber Eats customers, partnering eateries and delivery partners will be migrated to the Grab platform.
The Uber app will continue to operate for two weeks until 8th April 2018, after which riders will have to download the Grab app and register for an account to use the service. The data customers previously shared with Uber – excluding payment information – will also be transferred to Grab, although it will not be visible in the Grab app.
Customers can continue viewing their past trips and ratings on the Uber app, which can still be used with their accounts in countries outside Southeast Asia, Grab said. The account will remain active and can be used in any country outside southeast Asia where Uber operates.
Fares will continue to be calculated based on a base distance, with a dynamic surcharge that will be applied based on factors including demand and supply in that particular point in time, traffic conditions and estimated time taken for the journey, according to Grab’s website.
Passengers who choose the taxi options will continue to pay by metered fares that are set by the taxi companies. Fares for other services like GrabHitch or GrabShuttle will remain at the usual fixed amounts.
Uber for Business services for employees of local and global companies will not be supported for trips taken in Southeast Asia after the transition. Uber rides outside of Southeast Asia will still be supported through existing Uber for Business agreements.
For more information on Grab-Uber merger and how it affects passengers, click here.
For now, Uber drivers can sign up to drive with Grab online. According to the website, it will usually take five working days after the driver completes training for Grab to process new driver registrations.
However, Grab said it may take longer than usual to process registrations as it expects a large number of new drivers registering in the next few weeks.
Uber will pay its drivers any fares and incentives from rides picked up using the Uber Partner app, and will continue to handle and resolve any support requests entered by its drivers, Grab added.
Please note that LCR and UberHUB are closed until further notice.
In a Facebook update on Monday, Uber’s car rental partner Lion City Rentals said that it was closed “until further notice”, along with the UberHUB office at Paya Lebar Road.
Uber Eats will run until the end of May, after which Uber delivery and restaurant partners will move to the GrabFood platform, Grab said.
According to the website, customers can expect the prices on GrabFood to remain the same as they were on Uber Eats. Restaurant and delivery partners also should not expect to see a change in their compensation during the transition, it added.
According to a report by Meltwater,
Download the full report here.
FIERCE COMPETITION IN ASIA, CRACKDOWN IN EUROPE
SoftBank, which has also taken major stakes in China’s Didi Chuxing and India’s Ola, has been pushing for consolidation in the global ride-hailing industry, which has been losing billions of dollars a year due to turf wars.
Uber lost US$4.5 billion last year and has burned through US$10.7 billion since its founding nine years ago. Analysts say by that by exiting the tough South-east Asian,Uber could narrow its losses and better position itself for a 2019 initial public offering in the US.
It is also recovering from a year of scandals that saw co-founder Travis Kalanick ousted out as chief executive in June 2017 amidst US criminal inquiries and a workplace marred by sexual harassment allegations.
Grab, which started out as a taxi-hailing app, My Teksi, in Kuala Lumpur in 2012, has become the region’s dominant ride-hailing service with US$4 billion raised from investors.
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.
Uber’s CEO Dara Khosrowshahi said at a conference in New York in November that the company’s Asia operations were not going to be “profitable any time soon,” particularly because of how heavily Uber was subsidising rides there.
“The economics of that market are not what we want them to be,” he said at the time. Mr 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. During a visit to India in February, he pledged to continue investing aggressively in Southeast Asia.