Grab could acquire Uber’s Southeast Asia business by mid-March 2018

What would happen to Uber and ComfortDelGro alliance?

By Belmont Lay | March 9, 2018

According to Bloomberg on March 8, 2018, Grab is about one week away from acquiring Uber’s business in Southeast Asia.

The deal could be finalised by this week or next.

Uber to take stake in Grab

Grab is set to buy out Uber’s operations in certain Southeast Asia markets.

Uber will take a stake in Grab that could be up to 20 percent, said one of the people familiar with the talks but cannot be publicly named.

Uber struck a similar deal with Didi Chuxing in China in 2016. Uber then sold its local operation in exchange for equity in the Chinese company after a brutal bid to gain market share but failed.

What triggered acquisition?

Japan’s SoftBank Group Corp. became the largest shareholder in Uber in January 2018.

Grab has separately been in discussions with existing backers, including SoftBank, and new investors for additional capital.

Grab was most recently valued at US$6 billion.

With both Grab and Uber backed by SoftBank, the rationale would be to encourage ride-hailing startups in its portfolio to cut back on competing with each other and consolidating their positions to avoid burning through more cash.

Burn rate

Uber has burned through US$10.7 billion since its founding nine years ago.

It is not known if Uber will pull out of Asia altogether or focus on core markets such as the U.S., Europe, Latin America and Australia.

News of Grab’s near acquisition of Uber will send confusing and perhaps worrying signals to consumers in Singapore.

A new UberFlash service was made available from Jan. 19 recently, barely a month after Uber and Singapore taxi operator ComfortDelgro announced their alliance in late 2017.

Further mergers will see competition decrease and likely price increases for riders.

About Belmont Lay

Belmont can pronounce "tchotchke".

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