Wednesday, 28 March 2018

Uber 'Grabbed' by rival Grab

Grab acquires Uber's Southeast Asia operations
Uber will hold a 27.5% stake in Grab and have its CEO join the latter’s board

Grab has acquired Uber’s Southeast Asia operations. According to an announcement, in exchange, Uber will take a 27.5% stake in Grab & Uber CEO Dara Khosrowshahi will join Grab’s board. Moreover, Grab is now backed by DiDi Chuxing & Uber, in addition to leading global investor SoftBank.

Grab will integrate Uber’s ridesharing and food delivery business in the region into Grab’s existing multi-modal transportation and fintech platform. It will also take over Uber’s operations and assets in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

For its food delivery services, Grab will rapidly expand its existing GrabFood businesses in Indonesia and Thailand to two more countries - Singapore and Malaysia - following the integration of the Uber Eats business. “GrabFood will be available across all major Southeast Asian countries in the first half of 2018,” the firm said.

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Grab buys Uber; PCC sets review
Office workers walk past Grab and Uber offices during their lunch hour Monday, March 26, 2018, in Singapore. Grab, a fast growing Southeast Asian ridesharing, food delivery and financial services business, said Monday that Uber will take a 27.5 percent stake in it and a seat on its board as part of the deal. (AP Photo/Wong Maye-E)

Singapore-based Grab, Southeast Asia’s biggest ride-sharing company, snapped up main rival Uber’s business in the region, promising better services through its enlarged network.

Grab announced Monday it would take over Uber’s operations and assets in the Philippines, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand & Vietnam, ending months of speculation.

In exchange, California-based Uber will get a 27.5% stake in the combined business—a move seen to cut Uber’s massive losses as it prepares to go public next year. Grab said the figure reflected Uber’s market share in the region.

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Grab-Uber merger may have negative impact on riders and drivers

As an Uber driver, it came as a shock to me that Uber was sold to Grab (“Grab, Uber SEA confirm merger, with Uber taking 27.5% stake in Grab”; March 26).

Many of us private-hire car drivers are with Grab and Uber because they both have their own advantages. With the acquisition, I worry that many consumer and driver benefits will be lost.

Many people think that drivers just want more income through surge pricing or the payment incentives in providing ride-hailing services. However, this is not often the case. The non-financial benefits are important as well.

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Why Uber is selling its Southeast Asian business to a local rival
Grab will purchase Uber's ride-hailing and food delivery operations in Southeast Asia, in a deal valued at several billion dollars

Uber will sell its business in Southeast Asia to a local competitor, Grab, the ride-hailing company has announced, in a deal that experts say is designed to position Uber for an initial public offering next year.

Grab will purchase Uber's ride-hailing and food delivery operations in the region in a deal valued at several billion dollars, according to a person familiar with the acquisition who spoke on the condition of anonymity because they were not authorised to speak publicly. Uber will receive a 27.5 per cent stake in the Singapore-based Grab, and chief executive Dara Khosrowshahi will join Grab's board, the companies said.

Uber's sale in Southeast Asia, where Grab claims 5 million daily users, follows several strategic deals in competitive international markets. Yandax, a Russian rival, merged with Uber last year in a deal valued at US $3.7 billion. And in 2016, Uber sold off its local operations to the dominant Chinese ride sharing service, Didi Chuxing. Like the prior transactions, the deals free Uber to invest in other, more lucrative markets, while granting the company a stake in their competitors' expanding businesses, experts say.

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Why Uber Is Just Another Taxi Company Doomed to Bankruptcy

Not too long ago, new, improved Uber CEO Dara Khosrowshahi bemoaned his company’s massive hemorrhaging of cash and vowed to “get the love back” and restore Uber as a beloved brand. As an Uber/Lyft driver, all I can say is good f—ing luck with that. Here’s a news flash: Uber is bound to fail. And so is Lyft, Uber’s little sibling with better PR. The sooner we all understand this, the better.

Uber calls itself a “technology” company instead of a taxi company. This is because unlike a traditional cab company, for which you use your phone to call for a cab, you use your phone to call for a cab. See? The difference is obvious. Uber/Lyft’s business model is to lose money for years or decades to grow its market and then, suddenly, replace all its human drivers with robots. And then we’ll all be rich, because volume. How’s that working for you, fellas? Oh, Uber has lost more money than any start-up in human history? What? How can this be?! Uber makes so much money! Look at all the Uber/Lyft cars clogging our streets! We use it so much! How could it not be profitable?

The short answer is that they don’t charge enough. Uber’s rates in most of the USA are less than $1 a mile and 10 cents a minute. How long ago were taximeter rates that low? Well, that depends if you want to correct for inflation or not. For New York City taxi rates (which are roughly similar to SF’s) to get that low in non-adjusted dollars, you’d have to set your way-back machine to 1980, when you could rent a three-bedroom apartment for under $500 a month. In Nob Hill.

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As Uber bows out to Grab, drivers and riders bemoan loss of choice
A passenger of Grab bike fixes her helmet next to Uber driver at Manggarai train station in Jakarta, Indonesia, March 26, 2018. REUTERS/Beawiharta

A mix of concern and disappointment met Uber Technologies Inc’s [UBER.UL] deal to sell its Southeast Asian business to bigger regional rival Grab, as drivers and users of the ride-hailing firms took in the prospect of sharply reduced competition.

The services throughout Asia have long relied on discounts and promotions for consumers and incentives for drivers, which made for tough competition, pushing down profit margins.

Grab said the Uber acquisition accelerated its path to profitability in its core transport business, as it would become the most cost-efficient Southeast Asian platform. While drivers were split on which of the two services offered better compensation, they generally expected fares to go up with the reduced competition.

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Grab buys Uber’s Southeast Asia operations

In a move that its founder described as “the beginning of a new era”, Singapore-based Grab confirmed on Monday (Mar 26) that it will be taking over the Southeast Asia operations of its arch-rival Uber at an undisclosed sum.

The announcement puts an end to months of speculation about a merger, as well as years of intense turf wars which have seen both operators dishing out generous promotions to entice passengers.

With the acquisition, Grab will take over Uber's operations & assets in 8 Southeast Asian countries. It will be integrating Uber’s ride-sharing and food delivery business in the region into its platform. In exchange, Uber will take a 27.5% stake in Grab and Uber CEO Dara Khosrowshahi will join Grab's board.

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Grab says Uber deal driven independently by firms, has SoftBank support

Grab’s acquisition of U.S. ride-hailing firm Uber Technologies Inc’s [UBER.UL] Southeast Asian business was driven independently by the two companies, and was supported by their common investor, Japan’s SoftBank Group (9984.T), a top executive at the Singapore-based firm said.

“It was really a very independent decision by both companies. SoftBank, of course, and Masa in particular, was highly supportive of the acquisition,” Grab President Ming Maa told Reuters, referring to SoftBank CEO Masayoshi Son. The deal was in the “best interest of both of the companies”, he added.

The deal marks Uber’s second retreat from an Asian market and will see the firm take a 27.5 percent stake in Grab.

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Grab-Uber deal sparks fears of price hike
Consumers and industry watchers are raising concerns that Grab's acquisition of Uber's South-east Asian business will lead to higher fares. FOTO: ST FILE

Consumers & industry watchers are raising concerns that ride-hailing firm Grab's acquisition of rival Uber's South-east Asian business will reduce competition & lead to higher fares.

Ms Zhang Bin Bin, who takes both Grab and Uber rides, is unsure how fares will change now that "competition is minimised".

"If prices increase or if they match regular taxi prices, I will probably go back to public transport," said the film-maker, 23.

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ComfortDelGro to acquire 51% stake in Uber’s car rental subsidiary in Singapore for S$642m
Taxi operator ComfortDelGro and Uber announced on Friday (Dec 8) that they have entered into a strategic agreement to form a joint venture

Taxi operator ComfortDelGro and Uber announced on Friday (Dec 8) that they have entered into a strategic agreement to form a joint venture.

Under the agreement, which is subject to regulatory approval, ComfortDelGro will acquire a 51% stake in Uber’s wholly-owned car rental subsidiary in Singapore, Lion City Holdings, the 2 parties said in a joint media release.

The latter, in turn, operates Lion City Rentals which has a fleet of about 14,000 vehicles. Uber will retain the remaining 49%. Valued at about S$642 million, with a cash consideration of S$295 million, it ranks as ComfortDelGro’s single largest deal to-date.

related: How will the Grab-Uber deal affect ComfortDelGro?

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Who are the winners and losers?

While most of the taxi operators will likely be heaving a sigh of relief with the elimination of a major competitor, the same cannot be said for ComfortDelGro.

“ComfortDelgro is the biggest loser from this,” said Dr Lee, citing the S$642 million alliance between the taxi giant and Uber struck just 3 months ago, in which ComfortDelGro would acquire a 51% stake in Uber's Lion City Holdings. The collaboration between the two also led to the launch of UberFlash in January.

Analysts have said the alliance would give Singapore’s biggest taxi operator some help in keeping up with a disrupted taxi industry, as well as an uplift in earnings for its automotive engineering services and car leasing & rental divisions.  But the merger announced on Monday will likely render this alliance “futile”, analysts said.

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ComfortDelGro left in limbo as Uber falls to Grab
ComfortDelGro left in limbo as Uber falls to Grab

The proposed $642m acquisition of LCR might be renegotiated. As Grab assumes control over Uber’s Southeast Asian operations, ComfortDelGro is left in limbo amidst its proposed tie-up with the defeated ride-sharing giant.

On December, CD announced it was cooperating with Uber for a proposed acquisition of 51% of the Lion City Rental for $642m. This move launched the UberFlash service which matched riders with the nearest CD/UberX vehicle.

However, with Grab’s acquisition of Uber’s ride-sharing business, the terms & conditions of the deal could be renegotiated so that CD can continue to partner LCR with Grab, according to CIMB.

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Merger of Grab and Uber drive monopoly, pricing concerns 

Grab is acquiring Uber's ride-sharing and food delivery businesses in Southeast Asia and integrating them into its transport and fintech platform.

The merger between Grab and Uber is driving market concentration to monopoly levels, underlying the urgency of regulations that legalise and keep in check ride-sharing service in Thailand, say industry.

Sumet Ongkittikul, research director for transport and logistics policy at the Thailand Development Research Institute (TDRI), said the consolidation of ride-hailing firms in Southeast Asia might increase. Regulators need to take steps to protect consumers, legalise the service and implement anti-dumping laws, he said.

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Higher fares and reduced subsidies loom as Grab nabs Uber's operations

Analysts believe that being in a monopolistic position, Grab can change fare structures in order to improve profitability.

After Grab's acquisition of Uber's Southeast Asian operations, CEO Dara Khosrowshahi wrote to employees that consolidation will no longer be a strategy for the company after it also bowed out of the markets in China & Russia, and most recently in Southeast Asia.

“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,” Khosrowshahi said. “This transaction now puts us in a position to compete with real focus & weight in the core markets where we operate, whilst giving us valuable and growing equity stakes in a number of big and important markets where we don’t.”

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This Uber driver succinctly explains why it’s a bad idea for Uber and Grab to merge

In a letter to Today, Uber driver Benedict Wu explains how many consumer and driver benefits will be lost with the merger:

  • Difference in protection policies
  • Picking and choosing
  • Loss of benefits

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Full Coverage:
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Grab acquires Uber: What this means for the 500+ employees involved
Merger of Grab and Uber drive monopoly, pricing concerns
Grab-Uber deal sparks fears of price hike
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Grab acquires Uber: What this means for the 500+ employees involved
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