If you read the tech press, you might have seen reports that Uber is pursuing a sale in Southeast Asia that would see Grab, its Singapore-headquartered rival valued at $6 billion, acquire Uber’s business in the region.
Rumors of such a tie-in have been rife for a while.
Why not, then, extend that into Southeast Asia and sell to Grab?
There is competition.
Reliable data is hard to come by, but it is fairly widely accepted that Uber, once the leader in Southeast Asia, has dropped behind Grab across the region as a whole, while both companies trial local startup Go-Jek —
There are challenges.
Despite a cumulative population that exceeds six billion people, Southeast Asia’s ride-sharing business did just $5.1 billion last year, according to estimates from
There is the motivation.
Uber and Grab share a common investor in SoftBank. The Japanese firm
Pitting two of its portfolio together in a loss-making market probably doesn’t make sense to SoftBank at this point.
Someone, somewhere, seems very keen to make a deal happen, and so we have the reports.
The news was widely re-reported by a number of other media. But if you skip down to the second line of the original CNBC article, the transaction seems less definitive that the title suggests.
“No deal has been reached yet, and the timing of any such deal is uncertain,” CNBC reporter Alex Sherman wrote.
Uber and Grab both declined to comment on the report when we asked.
The Grab office in Singapore
The deal can make sense in financial terms, as above, but in practice there are certainly some question marks.
Uber may have fallen behind Grab, but it still has the brand. Uber invented ride-hailing, and it can continue to maintain a sizable market share, if not close the gap with some investment.
The word Uber is already a verb to many people, such is the company’s profile, and that isn’t just limited to the English language. There’s a huge amount of consumer awareness that Uber trades on, even when its competitors push hard with discounts, marketing and other strategies, is very much alive in Southeast Asia.
The market in the region is tipped to grow massively.
It might be hasty for Uber to retreat at this time. Certainly, the chips are down and things have been better, but the game is far from won as it was in China, where Uber had little mainstream recognition and was spending over $1 billion just to try to keep up with Didi.
There hasn’t been much of a reaction to the reports from Uber, but this week Khosrowshahi — who was in India as part of his first Asia tour with Uber — made a series of bullish comments that seemed to reaffirm a commitment to Southeast Asia,
“We expect to lose money in Southeast Asia and expect to invest aggressively in terms of marketing, subsidies etc,” Khosrowshahi told reporters in New Delhi, adding there is huge potential in the region thanks to a big population and fast internet user growth.
You could, of course, offer a counter argument that Khosrowshahi is playing hard to get or making negotiations with Grab tougher. But the Uber CEO also pointed out to press that Uber is just one shareholder and thus its aims and objective don’t represent the path that the company will take.
From Reuters again:
Khosrowshahi said SoftBank is an investor but Uber, which has a valuation of around $68 billion, will take any final decisions along with the board on mergers and partnerships.
There has certainly been some suspicion that the leaks may be coming from the investor side of Uber/Grab, given the benefits that consolidation might bring. The fact that these leaks have also intensified since SoftBank became interested in an Uber investment, certainly gives credence to that theory.
Indeed, SoftBank board member Rajeev Misra — who joined the Uber board following the investment —
Is SoftBank the source of these new leaks? You can draw your own conclusions.
So, while a deal might make some sense on paper, reports of an imminent acquisition seem wide of the mark. That said, this is the ride-hailing industry, and anything can happen.
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