Uber to Exit Southeast Asia for Stake in Rival Company Grab

Uber Technologies Inc. has reached an agreement in principle to sell its operations in Southeast Asia to local rival Grab Inc. This exit comes in exchange of as much as 30% stake in Grab, according to reports. Uber and Grab have yet to issue official statements.

The two companies are reportedly ironing out the details of the deal and a final agreement may be reached soon. It is still possible that Uber’s stake could become smaller. The deal will involve Uber’s major assets in the region, but it could possibly exclude small pieces of the Southeast Asian operations. It will be similar to the deal Uber made with Chinese ridesharing company Didi Chuxing in 2016.

The competition between the two has been costly.

Reports say Uber was spending about $200 million annually to take on Grab and another upstart in the region, PT Go-Jek Indonesia, a motorcyle-taxi service. Uber has reportedly spent over $10 billion since it was founded in 2009.

According to a report from Alphabet Inc.’s Google and Singapore state-investment firm Temasek Holdings, the Southeast Asia’s ride-hailing market is expected to grow more than five times to $13.1 billion by 2025 from $2.5 billion in 2015.

The move can help Uber shore up its finances in time for its planned 2019 initial public offering.

Last year, Uber posted a net loss of $4.46 billion on sales of $7.36 billion. Uber’s chief executive, Dara Khosrowshahi, was previously quoted as saying:

“The economics of that market are not what we want them to be.”

Grab, on the other hand, is valued at $6 billion. It has operations in 178 cities in Southeast Asia, and its app has been downloaded over 80 million times. The company is also reportedly in talks with potential investors, including Japan’s SoftBank, which also holds stakes in Uber, Didi, and India’s Ola.