Although no deal has been reached yet and it’s unclear when the said deal will be made, many believe that the merge seems inevitable given Uber's current business situation in Asia.
According to CNBC's insider sources, Uber is allegedly preparing to sell its Southeast Asia unit to Grab – Uber’s Singaporean-based competitor – in exchange of a "sizable" stake in the company. The CNBC report, however, didn't specify the amount.
Profitability could be one of the major reasons for the move. Uber has been struggling to make a profit in many Asian markets due to under constant competition from local firms such as Grab in Southeast Asia, Go-Jek in Indonesia, and Ola in India. The company reported a loss of US$645 million in the second quarter of 2017, which wasn't a positive sign for many investors. Reuters quoted Uber CEO Dara Khosrowshahi as saying that the Southeast Asia market has been “over-capitalized at this point.”
The decision could also be influenced by a recent deal made between Uber and a group of investors, led by Japanese conglomerate Softbank and Dragoneer, a venture capital based in San Francisco. In January 2018, Uber and Softbank agreed on a decision that would allow Softbank to keep approximately 15% of Uber's stake, making the Japanese giant Uber's largest shareholder. While Uber is positive in their ability to succeed in African and Asian markets, Softbank’s vision suggests otherwise. Board director Rajeev Misra believes it would be better if Uber only focuses on its core markets in the US, Europe, Latin America, and Australia.
Should the acquisition happen, it will not be the first time Uber has ever made such a move. In 2016, the company sold its Chinese unit to Didi Chuxing, a homegrown taxi-hailing conglomerate, in exchange for Didi’s 17.5% stake. Similarly, in July 2017, Uber merged their business with Russia’s Yandex for a 36.6% stake in a new venture, which marked its second retreat from an important market.
Both representatives from Uber and Grab declined to comment on the matter, stating they would not respond to "speculation."
In Vietnam, the merge would bear significant implications for the country's taxi and ridesharing market, tension has been broiling between conventional taxi providers and platform-based services Uber and Grab over unfair competition, legal status, and tax controversies. Uber and Grab were also under scrutiny recently due to their surge pricing during Tet and new commission policies that followed by drivers protests in Hanoi.
[Photo via Kenh14]
