Uber once wanted to expand all over the world, but on Monday it added to its list of big strategic retreats—with a little encouragement from its biggest investor these days, SoftBank.
In emails sent to staff, Uber CEO Dara Khosrowshahi said the company would merge with its big Southeast Asian rival, Grab. Uber will get a 27.5% stake in the combined firm, 500 staff will transition to Grab, and its customers will be shifted over to Grab’s apps.
Less than two years ago, Uber did much the same thing in China, when it ceded control of the market to rival Didi Chuxing. Last year, it followed suit in Russia and the Caucasus through a merger with Yandex’s ride-hailing business.
At the start of this year, the Japanese tech conglomerate SoftBank invested $9.3 billion in Uber and told the company to focus on its “core markets” in the U.S., Europe, Latin America and Australia.
SoftBank and Didi are increasingly partnering up, and last July the two companies invested $2 billion in Grab. Now Uber is handing over to Grab in countries including Singapore, Malaysia, Indonesia, the Philippines, Thailand, Vietnam, Cambodia and Myanmar.
“After investing $700 million in the region, we will hold a stake worth several billion dollars, and strategic ownership in what we believe will be the winner in an important global region,” Khosrowshahi wrote in his missive to staffers.
However, the CEO denied that consolidation was “now the strategy of the day.”
“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,” he wrote.
Grab president Ming Maa told Reuters that Grab and Uber had come up with the latest merger idea themselves, though SoftBank was “highly supportive of the acquisition.”
And what of Uber’s African business? Uber’s local representatives there have repeatedly insisted that, despite SoftBank’s favored strategy, the company isn’t pulling out of that continent. Time will tell.