(Bloomberg) -- Uber Technologies Inc. has agreed to sell its Southeast Asian operations to Grab, withdrawing from yet another fast-growing region to end a war of attrition with a fierce local rival.
Under the agreement, Grab will acquire all of Uber’s operations in a region of 620 million people, including food delivery service UberEats. The U.S. ride-hailing behemoth in return gets a 27.5 percent stake in Grab and its chief executive officer will join the board of the Singapore-based company. Bloomberg News reported over the weekend that the two companies had finalized a deal.
The cease-fire marks a victory for Grab as well as SoftBank Group Corp., the biggest shareholder in both companies. Masayoshi Son’s firm is pushing to reduce competition in a Southeast Asian ride-hailing market forecast to reach $20.1 billion by 2025. Uber and Grab, together with two other SoftBank-backed ride-hailing firms -- India’s Ola and China’s Didi Chuxing -- provide about 45 million rides a day, according to SoftBank presentation material in February.
For San Francisco-based Uber, pulling out of running its own business in Southeast Asia cuts back on losses ahead of a planned initial public offering in 2019. But the deal marks the latest retreat by the world’s most valuable startup from a rapidly expanding arena: Uber sold its business in China to Didi in 2016 after a battle in which both burned through cash to court drivers and riders with rich subsidies. Uber negotiated a similar move in Russia last year.
“Today’s acquisition marks the beginning of a new era. The combined business is the leader in platform and cost efficiency in the region,” Grab CEO Anthony Tan said in a statement.
Uber CEO Dara Khosrowshahi has been pushing to bolster the financials of a company that’s burned through $10.7 billion since its founding nine years ago. Khosrowshahi signaled during a trip through Asia last month that he’s committed to other key markets such as Japan and India. But its latest exit suggests Uber is more than ever dependent on its home market of North America, not unlike Khosrowshahi’s previous U.S.-centric employer, Expedia Inc.
For Grab’s Tan, the truce brings to an end a bruising battle for leadership in Southeast Asia.
Grab, which started out as a taxi-hailing app in Kuala Lumpur in 2012, became the region’s dominant ride-hailing service in past years with $4 billion raised from investors. It was most recently valued at $6 billion, according to CB Insights. Today, with more than 86 million mobile app downloads, it offers a wide range of ride-hailing services in 191 cities across Singapore, Indonesia, the Philippines, Malaysia, Thailand, Vietnam, Myanmar and Cambodia.
The deal “will help us double down on our plans for growth as we invest heavily in our products and technology,” Khosrowshahi said in the statement.
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