Grab takes over Uber in the Philippines

27 March 2018 – Uber Technologies Inc. has announced that it has sold its stake in the South East Asian Region to regional competitor Grab of Singapore.  In the said deal, Grab will take over operations of Uber in around 8 countries in the region where the 2 companies compete.

With this deal, Uber has bought in 27.5% stake in Singapore based Grab. Uber CEO Dara Khosrowhshahi will be seating in the Board of Grab based on the deal that was struck between the two transport giants.  Of the merger, Khosrowshahi said: “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.”  The merger is touted as one of the biggest in the South East Asian region, leaving Grab as the dominant player in the market.  For Uber however, it is part of the efforts to streamline its costs in view of an upcoming public listing.  Currently, the deal between Grab and Uber largely affects the SEA region where Grab will be the predominant Brand.  But overall, Uber globally now owns a significant stake in Grab.

In the Philippines, both companies had been competing toe-for-toe in a market that lacks the modern amenities of modern mass transportation system. Recently, both operators were slapped with heavy fines and suspensions by the Land Transportation and Franchising Regulatory Board (LTFRB) for operating without any franchise in the Philippine market.

In August of 2017, Uber had to pay a total fine of $10 Million dollars or Php 190 million in order to be able to operate its ride sharing transport model.  The fine was a result of Uber’s non compliance and ignoring an LTFRB order while Grab had complied with it.  This partly led to the resignation of Uber CEO Travis Kalanick and the assumption of the position by Khosrowhshahi.

Sadly for the Philippine market, Uber was the more preferred brand due to its signing up private car owners as compared to Grabs taxi drivers who have been known to abuse passenger fares. Formal announcements in the Philippines have yet been made by both the franchisees of Uber and Grab and how the merger will take effect. There will be a two week period for the adjustments to take place as announced by Uber.

In a letter to the SEA Uber team, Khosrowhshahi congratulated the team for the growth they achieved and wished them well in the period of adjustment.  Philippine Uber app owners received emails stating that all legal obligations and contracts of Uber in the Philippines shall now be addressed to the legal department of Grab.

This news has been verified by NewsmePh

https://www.reuters.com/article/us-uber-grab/uber-sells-southeast-asia-business-to-grab-after-costly-battle-idUSKBN1H204K

http://money.cnn.com/2017/08/30/technology/business/uber-philippines-service-resumes/index.html

https://www.uber.com/en-PH/newsroom/uber-grab/

 

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