Uber will be said to have agreed to sell Southeast Asia business to rival Grab

Ride-hailing firm Uber Technologies has agreed to sell its Southeast Asian business to bigger regional rival Grab, sources with knowledge of the matter said on Sunday, in what would likely be the U.S. company’s second retreat via Asia.

The deal, which could be announced as early as Monday, marks the industry’s first big consolidation in Southeast Asia, home to about 640 million people, in addition to also puts pressure on rivals such as Indonesia’s Go-Jek, backed by Alphabet’s Google in addition to also China’s Tencent Holdings.

As part of the transaction, Uber would likely get a stake of as much as 30 percent from the combined business, said a source with direct knowledge of the matter who did not want to be identified as the deal will be not yet public.

Another source familiar with the deal said Uber would likely acquire a 25 percent to 30 percent stake in Grab, valuing the entire business at $6 billion, the same valuation that will commanded in its most recent capital raising.

Uber in addition to also Singapore-based Grab, Southeast Asia’s biggest ride-hailing firm, declined to comment.

Expectations of consolidation in Asia’s fiercely competitive ride-hailing industry were stoked earlier This kind of year when Japan’s SoftBank Group made a multi-billion dollar investment in Uber.

SoftBank will be also one of the main investors in several of Uber’s rivals, including Grab, China’s Didi Chuxing, in addition to also India’s Ola.

Ride-hailing companies throughout Asia have relied on discounts in addition to also promotions to attract both riders in addition to also drivers from the fast-growing market, driving down profit margins.

Uber, which will be preparing for a potential initial public offering in 2019, lost $4.5 billion last year in addition to also will be facing fierce competition at home in addition to also in Asia, as well as a regulatory crackdown in Europe.

that will will be also recovering via a year of scandals that will saw co-founder Travis Kalanick forced out as chief executive in June amid U.S. criminal inquiries in addition to also a workplace marred by sexual harassment allegations.

SoftBank gained two seats on Uber’s board of directors through its investment in addition to also has said that will wants the company to focus on growing from the United States, Europe, Latin America in addition to also Australia, although not in Asia, due to the lack of profitability.

Uber’s CEO Dara Khosrowshahi said at a conference in fresh York in November that will the company’s Asia operations were not going to be “profitable any time soon,” particularly because of how heavily Uber was subsidizing rides there.

“The economics of that will market are not what we want them to be,” he said at the time.

Khosrowshahi, who took over the top job at Uber in August, has been working to clean up the company’s financials ahead taking that will public.

Still, during a visit to India in February, he pledged to continue investing aggressively in Southeast Asia.

at This kind of point that will Uber will be pulling out of Southeast Asia, attention may turn to the company’s operations in India, which accounts for more than 10 percent of Uber’s trips globally, although will be not producing money yet.

Uber’s deal with Grab would likely be similar to the one struck in China in 2016, when a bruising cost war ended in Didi Chuxing buying out Uber’s China business in return for a stake from the company.

Grab raised about $2.5 billion last July via Didi, SoftBank in addition to also others in a deal valuing the company at around $6 billion. Bloomberg first reported the deal.

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