Taxi giant ComfortDelGro and ride-hailing firm Uber have agreed to dissolve a strategic agreement which they entered into last December.
In a statement yesterday, ComfortDelGro said it will no longer be acquiring a 51 per cent stake in Uber's wholly owned car rental subsidiary in Singapore, Lion City Holdings.
The acquisition, valued at about $642 million, was dependent on the taxi operator being able to use the Uber app here. But since Uber decided to pull out of the South-east Asian market in March, that is no longer possible. The Uber app was switched off on May 7.
As a result of the deal being called off, ComfortDelGro said an application to the Competition and Consumer Commission of Singapore will be withdrawn.
The application was for the commission to approve the alliance.
ComfortDelGro chief executive Yang Ban Seng said: "The operating environment has changed and the basis on which we were supposed to form the partnership is no longer relevant, given that Uber has exited the region.
"Nevertheless, the group still has every intention to go into the private-hire vehicle space as we see the increasing convergence of private-hire vehicles and taxis in the personalised mobility market."
ComfortDelGro's announcement came a day after Indonesian ride-hailing firm Go-Jek said it would be entering the Singapore market in the next few months.
The Straits Times understands that Go-Jek has approached ComfortDelGro for a tie-up. If such a deal materialises, ComfortDelGro is likely to buy up excess cars in the private-hire sector, estimated to run into the thousands.
Two weeks ago, hundreds of unhired cars once owned by Uber's Lion City Rentals flooded the used-car market.
Observers expect more to come.
Singapore University of Social Sciences senior lecturer and transport economist Walter Theseira said ComfortDelGro and Uber calling off their alliance "is not terribly surprising".
"Whether by design or luck, ComfortDelGro has been making various missteps in the private-hire space," Dr Theseira said, referring to a previous deal with Karhoo which did not materialise either.
He said the group "seems to have a knack for choosing the weaker player", but added that that could also be intentional.
"Choosing the weaker player would give it better leverage, and it would be able to control the terms of engagement better," he said.
Meanwhile, Uber chief business officer Brooks Entwistle said: "I would like to thank both teams and ComfortDelGro's leadership for their efforts in shaping the future of the industry, and look forward to seeing how our respective learnings change the way the world moves."