By now you always know what is happening: Uber’s board is allowing Softbank to become a shareholder.
Probably a huge relief for early investors of Uber, many of whom are desperate to exit as their funds approach maturity. Of course they might fight over the price (what Softbank offers is lower than current valuation), but already it is huge gain from their initial investment.
Grab-Uber merger?
What are the implications, if this deal goes through, for Southeast Asia’s ride hailing market, where Uber and Grab (and Go-Jek in Indonesia) has been fighting a bitter market share war?
Bearing in mind that Softbank, on its own and through Didi, owns almost 60% of Grab?
The most logical outcome is that both Uber and Grab will come to terms to curb cash burns. This can be done through either a merger or an agreement of some sort.
They can argue that even if they merge, the combined company will still own just a small percentage of the overall taxi market – not enough for antitrust watchdogs to raise their eyebrow even.
Anyway, the region’s antitrust agencies are not the most aggressive sort as you see in some parts of the world (read: Western Europe).
That way they can also focus on exterminating Go-Jek (which I seriously doubt if they are capable of, even through combining their forces).
Merger not given
However, a merger is not given, even if Softbank has the strong will to make it happen: there are other stakeholders, including Grab investors and Uber board, to convince.
Case in point: Softbank tried very hard to broker a merger deal between Flipkart and Snapdeal, two ecommerce platforms in India. That did not happen, thanks to stubborn Snapdeal shareholders, sending Snapdeal on an almost free fall.
One thing is certain, no matter who prevails, Softbank will be a shareholder.
A bigger, better story
So, now with early investors of Uber (and those of Grab) happily out, both companies can afford to stay private for longer.
And that gives them breathing space, enough to develop a better narrative, be it driverless car, transport data or something else.
Bear in mind, if Softbank wants, it can still pump in a lot of cash, by itself, through Didi or through its $93 billion Vision Fund.
Only that the cash will be spent on more meaningful areas than subsidies and discounts.
