SINGAPORE - Singapore-based Grab on Monday (March 26) confirmed that it has acquired Uber's South-east Asia operations for an undisclosed sum - putting an end to recent speculation about the merger between the two ride-hailing giants.
Bloomberg had reported on Sunday that the two companies had reached a deal.
Uber will take a 27.5 per cent stake in Grab, a figure which Grab described as "reflective of the companies' respective market shares".
Uber's chief executive Dara Khosrowshahi will join Grab's board.
With the acquisition, Grab will take over Uber's operations and assets in eight countries in the region, namely Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
Grab president Ming Maa told Reuters on Monday that the deal was closed and the firm was in touch with regulators to address any concerns.
He added that the deal was "a very independent decision by both companies" and was "highly" supported by their common investor, Japan’s SoftBank Group.
Grab on Monday also said it will take over the operations of Uber's food delivery business, Uber Eats. Grab will expand its existing GrabFood businesses in Indonesia and Thailand to two more countries - Singapore and Malaysia - following the integration of the Uber Eats business.
Grab said that GrabFood will be available across all major South-east Asian countries in the first half of 2018. "To minimise disruption, Grab and Uber are working together to promptly migrate Uber drivers and riders, Uber Eats customers, merchant partners and delivery partners to the Grab platform."
The Uber app will continue to operate for two weeks to "ensure stability" for Uber drivers, who can sign up online to drive with Grab. Uber Eats will run until the end of May, after which Uber delivery and restaurant partners will move onto the GrabFood platform.
Grab chief Anthony Tan said: "Today's acquisition marks the beginning of a new era. The combined business is the leader in platform and cost efficiency in the region. Together with Uber, we are now in an even better position to fulfil our promise to outserve our customers."
The deal marks the third time that Uber has either sold or merged one of its businesses outside the US. Uber sold its China business to rival Didi Chuxing and merged its Russia operations with tech firm Yandex.
Uber CEO Dara Khosrowshahi, in emails to staff posted in the Uber Newsroom, argued that the company was not on a consolidation path.
He wrote: "It is fair to ask whether consolidation is now the strategy of the day, given this is the third deal of its kind, from China to Russia and now Southeast Asia. The answer is no.
"One of the potential dangers of our global strategy is that we take on too many battles across too many fronts and with too many competitors. 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."
According to a CNBC report on Monday, Mr Khosrowshahi also wrote that around 500 Uber employees in South-east Asia would move over to Grab, while a Uber spokesperson said some staff would remain part of Uber's Asia Pacific operations and there would be no lay-offs as part of the deal with Grab.
Grab, which started out as a taxi-hailing app in Kuala Lumpur in 2012 and is now headquartered in Singapore, has become the region’s dominant ride-hailing service with US$4 billion raised from investors.
Uber lost US$4.5 billion last year and has burned through US$10.7 billion since its founding nine years ago. Analysts say by that by exiting the tough South-east Asian,Uber could narrow its losses and better position itself for a 2019 initial public offering in the US.
Expectations of an Uber exit from South-east Asia ratcheted up after Japanese financial giant Softbank, which is already a key investor in Grab, became Uber's biggest shareholder with a 15 per cent stake. SoftBank, which has also taken major stakes in China's Didi and India’s Ola, has been pushing for consolidation in the global ride-hailing industry, which has been bleeding billions of dollars a year due to turf wars.