SINGAPORE: Grab, the biggest ride-hailing firm in Southeast Asia, is reported to be close to securing a deal with Uber Technologies, which would see Grab buy out its US rival in parts of the region.
The two companies have been competing hard to gain control of the ride-hailing market in Southeast Asia, which is home to around 620 million consumers, but a new deal could be signed between the two rivals as early as this week or next.
That is according to “people familiar with the matter”, who told Bloomberg that a potential agreement could be similar to the deal Uber struck with China’s Didi Chuxing in 2016.
Back then, Uber sold its local operation in China in exchange for a stake in Didi Chuxing and, according to one of Bloomberg’s sources, the talks with Grab could see Uber take a stake of up to 20% in its Singapore-based rival.
There has been speculation for some time that loss-making Uber should concentrate on trying to improve its finances by pulling back from Asia.
For example, Rajeev Misra, a senior executive at Japan’s SoftBank, which became the largest shareholder in Uber in January, told the Financial Times that Uber was more likely to achieve profitability if it concentrated on its core markets of the US, Europe, Latin America and Australia.
That is a view shared by Xiaofeng Wang, an analyst at Forrester, who told Reuters: “Grab is much bigger in Southeast Asia and they understand the local market much better. Uber has to be more focused on those markets where it is doing quite well and have more advantages – like Europe and the US.”
However, Uber’s new CEO, Dara Khosrowshahi, has indicated in recent trips to both Japan and India that he continues to view Asia as an important market for expansion.
“I saw Japan as an incredible opportunity, and when I asked the team why wasn’t our Japan business larger, I started learning the history of our approach to Japan, and it was an approach that frankly didn’t work,” Khosrowshahi said in Tokyo last month.
“It’s clear to me that we need to come in with partnership in mind, and in particular a partnership with the taxi industry here,” he added.
Sourced from Bloomberg, Financial Times, Reuters; additional content by WARC staff