Grab is taking over Uber’s SE Asia operations including Uber Eats across 8 countries in the region
Uber sold its China operations to Didi Chuxing and merged its ride-sharing businesses in Russia and neighboring countries with Yandex.
After much hype, rounds of rumors and speculations, it’s finally a done deal. Southeast Asia ride-hailing unicorn Grab and its global counterpart Uber announced today that, Grab is taking over Uber’s SE Asia operations including Uber Eats, according to the two companies’ joint press release out on Monday.
The deal comes as part of Grab’s effort to become the largest O2O platform in the region with its three-pronged businesses: ride-hailing, food delivery, and financial services.
Post-deal, Grab will merge Uber’s core ride-hailing service as well as Uber’s food delivery affiliate Uber Eats across 8 countries in the region – Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam – into its existing ride-hailing and fintech platform. In return, Uber will hold a 27.5 percent stake in Grab and Uber CEO Dara Khosrowshahi will join Grab’s board.
Uber app will run for another two weeks so that drivers will have time to migrate to the Grab platform, while Uber Eats will still be available until the end of May.
“Today’s acquisition marks the beginning of a new era. The combined business is the leader in platform and cost efficiency in the region.” Anthony Tan, founder and CEO of Grab said.
Grab operates in 195 cities in 8 countries in the region, while Uber has a presence in 64 cities across the region.
#1 Food Delivery Service
In addition to ride-hailing, combing the efforts of both companies’ food delivery arms could be the biggest perk of the deal, as the region’s online food delivery business is on the growth fast track.
Tan Hooi Ling, co-founder of Grab said in the joint release that Grab will soon expand its food delivery service GrabFood, that is now available in Indonesia and Thailand, to all major countries in the region in the next quarter. Separately, in an internal email to Grab employees we obtained, Tan said that the company aims to become the #1 food delivery service provider in the region, as he put it, “Food delivery is extremely synergistic with our business, in that it helps improve GrabBike driver earnings and productivity, whilst expanding the range of everyday services we offer to consumers.”
And it’s not just all about delivering food, according to Tan, GrabFood will also be another great use case to drive the continued adoption of GrabPay mobile wallet and support the company’s growing financial services platform.
Grab seeks to introduce GrabPay to all major SE Asia countries by year-end.
Uber’s 3rd Retreat
Uber’s retreat in SE Asia marks the global giant’s third time pulling out from an international market.
In an internal email to Uber Staff, CEO Dara addressed many employees’ concern that since this is the third deal of its kind, from China to Russia and now Southeast Asia, it’s fair to ask whether consolidation is now the strategy of the day. She gave no as an answer.
She explained to staff in the email that one of the potential dangers of Uber’s global strategy is that they take on too many battles across too many fronts and with too many competitors. While “this transaction now puts us in a position to compete with real focus and weight in the core markets where we operate, while giving us valuable and growing equity stakes in a number of big and important markets where we don’t.”
In 2016, Uber sold its China operations to Didi Chuxing and in February 2018, the San Francisco company merged its ride-sharing businesses in Russia and neighboring countries with Russian tech giant Yandex.
Uber CEO Dara Khosrowshahi said last year that Uber’s Asia operations were not going to be “profitable anytime soon” due to high ride subsidies.
Now with Uber ceding its SE Asia business to Grab, the competitive landscape in the region is about to shake up.
Before the deal, Uber, Grab and Go-Jek were locked up in a cut-throat competition in the region. Indonesia born Go-Jek, unlike its counterparts, has remained focusing on its home market but announced in last October that it was planning to expand and “bring competition to their (rivals) doorsteps”.
The merger between Grab and Uber SEA will create a giant that might not only impede Go-Jek’s overseas expansion but also pose a threat to Go-Jek’s home market domination.
Below is the email from Anthony Tan to Grab Employees.
Dear fellow Grabbers,
Today is a milestone day in the life of Grab and Southeast Asia’s tech industry.
It is my great honour and privilege to share with you that Grab has acquired Uber’s Southeast Asian transportation and food delivery operations in a landmark deal – the largest ever acquisition by a Southeast Asian internet company!
This is extremely significant because it not only affirms all of your hard work and cements our position as the leading multi-modal transport platform in Southeast Asia; it also means that both Didi Chuxing and Uber – the two largest ride-hailing companies in the world – are now our shareholders and strategic partners, opening up doors to creating the widest combined global transport coverage of any transport network, and invaluable knowledge exchange. The fact that Uber chose to close the deal with us, becoming one of our shareholders, despite having received a competing offer for a much larger stake in one of our competitors, reflects their recognition of our undeniable market leadership, and strong confidence in our future growth potential.
On top of that, as part of the acquisition, we will be taking over Uber’s Southeast Asian food delivery operations, which together with our growing GrabFood business in Indonesia, immediately propels us towards becoming one of the leading regional food delivery players. Food delivery is extremely synergistic with our business, in that it helps improve GrabBike driver earnings and productivity, whilst expanding the range of everyday services we offer to consumers. Stay tuned for more updates on GrabFood soon as we expand to all major cities across the region by end of 1H 2018, and push towards becoming the #1 food delivery service provider in the region!
To all Grabbers around Southeast Asia and beyond – thank you!
You made it happen. Thank you for all the hard work, sleepless nights and sacrifices you and your loved ones have made to get us here. Thank you for your passion, dedication and commitment to making life better for all Southeast Asians, enabling us to build a world-class, on-demand transportation service that millions of Southeast Asians count on every day. Thank you for daring to take on seemingly impossible challenges together with us, proving time and time again that nothing is impossible when Grabbers work together.
So what’s next?
Whilst there will be no change to the roles and responsibilities of Grabbers, the next few weeks will be a crucial time of transition, as we welcome new teammates, drivers, and riders. In almost all our markets, we are now the primary on-demand transportation provider. Expectations for Grab have just gotten bigger, so it is now more important than ever that we hold ourselves to even higher standards, and work together to bring the best possible Grab to all our users, old and new. In line with that, our Pops team has put together some FAQs and guidelines for us in handling this situation – please read it carefully. It is up to us to make today’s historic announcement a long-term success.
Also, as we welcome the Southeast Asian Uber team into our midst in the coming weeks, remember that this will be a significant transition for them. So please offer them your warmest welcome and let’s do our best to help them feel at home with us.
Looking further ahead, our strategy and aspirations have not changed. Southeast Asia continues to be one of the most dynamic economic regions in the world, with the fastest growing middle class and digital economy of any region – and Grab is right at the heart of it. Our challenge and opportunity now, is to leverage the strength of our transport business, to become the leading online-to-offline (O2O) mobile platform in Southeast Asia – the life-changing app that no Southeast Asian can live without. We’ve made great steps in that direction, with our recent launch of Grab Financial and increased investments into GrabFood, GrabExpress, GrabRewards, and GrabPay, but there’s still a lot to be done. So keep up the great work and momentum, but most of all, stay focused on the customer – passengers, drivers, merchants, agents – because ultimately, they are our final judge and jury.
We’ve come a long way, but we must always stay humble, and remember our roots.
Most of you are very familiar by now with where Grab came from – how we started in a room the size of a closet with little more than a desk, and a big idea that we could make public transportation safer and more convenient.
We didn’t have much resources to draw on in those days, but we knew that if we brought more determination, grit, creativity and commitment we could succeed.
Eight countries, nearly 200 cities, and hundreds of millions of rides later, that philosophy remains unchanged. Grab is the little company that could – and can. Even as we conclude this history-making transaction today, I encourage all of us to reflect on our humble beginnings and the journey that got us here. We didn’t succeed because we had more money, resources or experience than our competitors – we succeeded because we always focused on what was best for our consumers and communities; because we stayed humble, we listened, we learned, and we persevered. Honour, Heart, Humility and Hunger got us here. Let’s never forget or lose that.
Over the coming days and weeks, our leaders and I will be visiting our offices around the region, and I hope to meet with all of you in the days ahead to thank you in person for your contribution to Grab’s success.
For now, let me conclude by expressing my deepest gratitude and thanks to all of you. Together, we have brought an epic chapter in the story of Grab to a victorious end, and I look forward to co-authoring the next exciting chapter of our adventure together with all of you.
(This story has been updated to include Grab CEO Anthony Tan’s internal email to staff.)