Singapore’s largest taxi company ComfortDelGro offers to buy a 51 percent stake in Uber Technologies Inc’s Singapore car rental unit for S$295 million ($217.99 million) to form a joint and tackle local rival, Grab.
ComfortDelGro will be acquiring the stake in Uber’s private hire vehicle fleet owner Lion City Holdings that owns Lion City Rental. The Singapore-based taxi operator announced the deal on Friday, after the trading hours, saying that the acquisition will be financed by company’s internal funds.
According to ComfortDelGro, the deal, including cash and loans will be valued at S$642 million and the company would control a fleet of 14,000 vehicles, under the agreement. While ComfortDelGro will buy 51% of the ride-hailing giant, the remaining 49 percent will be retained by Uber itself.
The agreement will allow CmfortDelGro’s taxi drivers to receive ride requests on the Uber driver application while also letting Uber app users book a ComfortDelGro taxi directly.
The move follows a year in which Uber’s rival Grab grew its market share in private-vehicle rides to 72%. Grab, fiercely competes Uber across seven South Asian countries and the joint with ComfortDelGro could help battle the rival conveniently.
Ming Maa, President of Grab said that Uber is “under siege” from multiple rivals in multiple countries for the first time this year. The ride-hailing giant had been competing for rivals in almost every country it has expanded itself to and is having a tough time dealing with all of them at the same time. Back in July, the San Francisco-based company agreed to merge its business in Russia and neighboring ex-soviet republics into a combined venture. The deal marked Uber’s second retreat from a major market after selling its operations in China to rival Didi Chuxing in exchange for a minority stake in a new venture, last year.
ComfortDelGro disclosed in August that it signed a letter for exclusive talks with Uber for potential companionship. Since then, the taxi company’s shares lost 11 percent of their value, as investors became impatient with the plan. On Friday, when the deal was announced, ComfortDelGro had its shares close1.6 percent lower at S$1.91.