SINGAPORE: Ride-hailing firm Uber Technologies Inc. has agreed to sell its Southeast Asian business to bigger regional rival Grab, sources with knowledge of the matter said on Sunday, in what would be the US company’s second retreat from Asia.
The deal, which could be announced as early as Monday, marks the industry’s first big consolidation in Southeast Asia, home to about 640 million people, and puts pressure on rivals such as Indonesia’s Go-Jek, backed by Alphabet Inc’s Google and China’s Tencent Holdings Ltd.
As part of the transaction, Uber would get a stake of as much as 30 percent in the combined business, said a source with direct knowledge of the matter who did not want to be identified as the deal is not yet public.
Another source familiar with the deal said Uber would acquire a 25 percent to 30 percent stake in Grab, valuing the entire business at $6 billion, the same valuation it commanded in its most recent capital raising.
Uber and Singapore-based Grab, Southeast Asia’s biggest ride-hailing firm, declined to comment.
Expectations of consolidation in Asia’s fiercely competitive ride-hailing industry were stoked earlier this year when Japan’s SoftBank Group Corp. made a multi-billion dollar investment in Uber.
SoftBank is also one of the main investors in several of Uber’s rivals, including Grab, China’s Didi Chuxing, and India’s Ola.
Ride-hailing companies throughout Asia have relied on discounts and promotions to attract both riders and drivers in the fast-growing market, driving down profit margins.
Uber, which is preparing for a potential initial public offering in 2019, lost $4.5 billion last year and is facing fierce competition at home and in Asia, as well as a regulatory crackdown in Europe.
It is also recovering from a year of scandals that saw co-founder Travis Kalanick forced out as chief executive in June amid US criminal inquiries and a workplace marred by sexual harassment allegations.
SoftBank gained two seats on Uber’s board of directors through its investment and has said it wants the company to focus on growing in the United States, Europe, Latin America and Australia, but not in Asia, due to the lack of profitability.
Uber’s CEO Dara Khosrowshahi said at a conference in New York in November that the company’s Asia operations were not going to be “profitable any time soon,” particularly because of how heavily Uber was subsidizing rides there.
“The economics of that market are not what we want them to be,” he said at the time.
Khosrowshahi, who took over the top job at Uber in August, has been working to clean up the company’s financials ahead taking it public.
Still, during a visit to India in February, he pledged to continue investing aggressively in Southeast Asia.
Now that Uber is pulling out of Southeast Asia, attention may turn to the company’s operations in India, which accounts for more than 10 percent of Uber’s trips globally, but is not making money yet.
Uber’s deal with Grab would be similar to the one struck in China in 2016, when a bruising price war ended in Didi Chuxing buying out Uber’s China business in return for a stake in the company.
Grab raised about $2.5 billion last July from Didi, SoftBank and others in a deal valuing the company at around $6 billion. Bloomberg first reported the deal.
Uber to sell Southeast Asia business to rival Grab -sources
Uber to sell Southeast Asia business to rival Grab -sources
G7 countries to release oil reserves as IEA agrees to largest ever market intervention
- IEA recommends release of 400 million barrels
RIYADH: Germany, Japan and Austria will release part of their oil reserves after the International Energy Agency recommended the release of 400 million barrels of oil from stockpiles, the largest such move in IEA history.
In a statement, IEA Executive Director Fatih Birol said the flow of oil, gas and other commodities through the Strait of Hormuz have all but stopped, leading global energy supply to fall by around 20 percent.
Ahead of the confirmation of the move — a larger intervention than the 182.7 million barrels that were released in 2022 by in response to Russia’s invasion of Ukraine — several countries began setting out plans to bring their reserves into play as countries grapple with soaring crude prices amid the US-Israeli war with Iran.
Birol said: “I can now announce that IEA countries have decided to launch the largest ever release of emergency oil stocks in our agency's history.
“IEA countries will be making 400 million barrels of oil available to the market to offset the supply lost through the effective closure of the strait.
“This is a major action aiming to alleviate the immediate impacts of the disruption in markets.”
Germany’s Economy Minister Katherina Reiche confirmed on Wednesday her government plans to limit petrol price increases at filling stations to once a day and to introduce more stringent antitrust regulation of the sector.
She did not give an exact timing for those measures, but added that the US and Japan would be the largest contributors to the release of the oil reserves.
The US has not confirmed it would do so, but its Interior Secretary Doug Burgum told Fox News on Wednesday that “these are the kinds of moments that these reserves are used for.”
The announcements did not stop oil prices rising, with Brent crude up 3.26 percent to $90.66 a barrel at 4:29 p.m Saudi time, and West Texas Intermediate up 3.12 percent to $86.05. Both were some way below the $119 a barrel seen earlier in the week.
“The situation regarding oil supplies is tense, as the Strait of Hormuz is currently virtually impassable,” Germany’s Reiche said.
“We will comply with this request and contribute our share, because Germany stands behind the IEA’s most important principle: mutual solidarity,” Reiche said about the IEA’s request.
According to a statement by Reiche’s ministry, Germany will contribute 2.64 million tonnes of oil. This corresponds to 19.51 million barrels.
Reiche stressed there was no supply shortage in the country, which has a legally mandated reserve of oil and oil products intended to cover 90 days’ demand.
South Korea will release 22.46 million barrels of oil, which represents 5.6 percent of the total IEA ask, the country's industry ministry said.
“The government will consult with the IEA secretariat on details, such as the timing and amount, from the perspective of national interests in accordance with domestic conditions,” the ministry said in a statement.
The ministry said it would continue to coordinate closely with major countries in responding to high oil prices to minimise any domestic impact.
Austrian Economy Minister Wolfgang Hattmannsdorfer said his country was releasing part of the emergency oil reserve and extending the national strategic gas reserve, adding: “One thing is clear: in a crisis, there must be no crisis winners at the expense of commuters and businesses.”
Acting ahead of the IEA move, G7 member Japan announced plans to release 15 days' worth of private-sector oil reserves and one month's worth of state oil reserves.
“Rather than wait for formal IEA approval of a coordinated international reserve release, Japan will act first to ease global energy market supply and demand, releasing reserves as early as the 16th of this month,” Prime Minister Sanae Takaichi said in a broadcast statement.
Following a meeting with the IEA on Wednesday, G7 energy ministers said: “In principle, we support the implementation of proactive measures to address the situation, including the use of strategic reserves.”
All IEA member countries are required to keep 90 days’ worth of their nation’s oil use in reserve in case of global disruption.
