Uber will sell its ride-share and food delivery businesses in the region for a 27.5% stake in Grab, the Singapore-based firm said in a statement Monday.
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. The value of the deal remains undisclosed.
The deal enables Uber to keep a foothold in the increasingly affluent market of 640 million people while cutting its losses.
But Grab, which operates in 195 cities in eight Southeast Asian countries, became the dominant force in ride-hailing, leaving its troubled U.S. rival struggling.
Anthony Tan, Grab's chief executive, has said that the deal "marks the beginning of a new era" for customers. Uber can now concentrate on Europe, America, India, the Middle East and Latin America without having to worry about competing with a rival that always had superior local knowledge.
The deal with Grab prompts questions about a similar departure of Uber from India, where it is battling with the car-hailing company Ola.
Grab will extend its leadership as it takes over Uber's operations and assets in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
Grab is a rapidly expanding ride-sharing, food delivery and financial services provider in the region.
She added that the firm will be talking to more than 500 Uber employees here to see "how they would fit into Grab". Today, those rumours and speculations are put to rest as Grab officially announces that they're taking over operations for Uber in Southeast Asia.
Why Grab? Why not Uber? For instance, Grab let passengers text drivers via a chat feature within the app with in-built automated translation feature.
Grab said in its FAQ that because Uber passengers will now be transiting to the Grab platform, this means there'll be more passengers, less waiting time and more earnings for drivers.