“This deal is the largest-ever of its kind in Southeast Asia,” Grab said.
“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.”
Uber is due to take a 27.5-per-cent stake in Grab and Uber chief executive Dara Khosrowshahi will join Grab’s board.
Grab will take over Uber’s operations and assets in Singapore, Malaysia, Cambodia, Indonesia, Myanmar, the Philippines, Thailand and Vietnam.
It is the third major market from which Uber is retreating, following China and Russia.
The world’s most valuable startup sold its business in China to Didi in 2016 after a costly battle to attract drivers and users with heavy subsidies. Uber negotiated a similar retreat in Russia last year.
The internal email Khosrowshahi sent his staff announcing the deal recognises that Uber’s global strategy of overseas expansion is not succeeding.
“One of the potential dangers of our global strategy is that we take on too many battles across too many fronts with too many competitors,” the message says.
Last year, Uber lost US$4.5 billion and its CEO as it underwent a reforms following a harassment scandal.
There were fears the Grab deal could push up prices for customers in Asean.
“Industry consolidation will mean fewer choices for commuters and fares are likely to trend higher over time,” said Corrine Png from Singaporean research firm Crucial Perspective.
Grab chief Ming Maa acquisition was supported by the companies’ common investor, Japan’s SoftBank Group.
SoftBank is a major investor in several of Uber’s rivals, including Grab, China’s Didi Chuxing and Ola in India.
It is believed SoftBank pushed for consolidation to boost revenues.
The deal puts pressure on rivals such as Indonesia’s Go-Jek, backed by Google, and China’s Tencent.
Attention may turn to Uber’s operations in India, which account for more than 10 per cent of the app’s trips globally, but is not yet profitable. Uber still has operations in Japan and South Korea but these are both under pressure.
The deal includes the food delivery service, Uber Eats meaning GrabFood service will double its Asean operations to four countries by the next quarter, Grab said.
Uber hoped to shakeup Asean’s taxi market. Picture credit: Flickr