Uber Technologies Inc. has agreed to sell its Southeast Asian business to regional rival Grab. The agreement includes all of Uber’s operations in Southeast Asia as well as Uber Eats in the region, according to people familiar with the matter. Uber and Grab are expected to announce the deal as early as Monday.
Grab started out as a taxi-hailing app in Kuala Lumpur in 2012. The company now offers services in more than 190 cities across Singapore, Indonesia, the Philippines, Malaysia, Thailand, Vietnam, Myanmar and Cambodia. Its mobile app has been downloaded more than 86 million times.
Singapore-based Grab is currently Southeast Asia’s biggest ride-hailing firm. The move puts pressure on rivals such as China’s Tencent Holdings Ltd. and Indonesia’s Go-Jek, backed by Alphabet Inc.’s Google. Uber would get a stake of as much as 30 percent in the combined business as part of the transaction.
Southeast Asia is home to about 640 million people. The fast-growing market has been driving down profit margins for ride-hailing companies throughout Asia as they compete for riders and drivers. Uber’s CEO Dara Khosrowshahi said in November at a conference in New York that the company’s Asia operations were not going to be “profitable any time soon.”
The move is Uber’s second retreat from Asia. Uber’s business in China was sold in 2016 for a 17.5 percent stake in Chinese ride-hailing leader Didi Chuxing. The ride-hailing giant has also agreed to sell its Russian business to Yandex.
Khosrowshahi took over the top job at Uber in August after co-founder Travis Kalanick was forced out as chief executive in June amid a year of scandals. The company has burned through $10.7 billion since its founding nine years ago. Uber is preparing for a potential initial public offering in 2019.
Japan’s SoftBank Group Corp. made a multi-billion dollar investment in Uber earlier this year. SoftBank gained two seats on Uber’s board of directors through its investment. SoftBank is also one of the main investors in several of Uber’s rivals, including Grab. Grab raised about $2.5 billion last July in a deal valuing the company at around $6 billion.