Uber Agrees on Southeast Asian Sale to Grab
bloomberg.com
bloomberg.com
The anticompetitive effects of common ownership [1] have been hypothesized in respect of the public markets:
"A lot of the way we traditionally think about corporate governance does not fully account for the fact that most investors are diversified. This comes up a lot in mergers and acquisitions. Company A wants to buy Company B. If they combine, they will have cost savings worth $X, and the question is how much of $X goes to Company B shareholders in the form of merger premium and how much of it goes to Company A shareholders. If you are a diversified investor holding a proportional amount of both companies' shares, you don't care at all. You just want the deal done. But because corporate law, at least in the M&A context, gives directors a duty to maximize value for their shareholders, Company B will negotiate hard to get as much of the premium as possible. Money will be spent on bankers and lawyers. Company A might be pushed to raise a lot of debt to pay more, making the benefits of the deal riskier (for Company A). And Company B might ultimately just say no to a deal because it doesn't like how the benefits are split, denying those benefits to diversified shareholders. By maximizing value for its shareholders, considered as its shareholders, Company B might actually be hurting those same shareholders, considering their entire portfolios." [2]
One doesn't find Fidelity going out and saying "you two should merge so you can raise prices on consumers." But I guess that's okay if you're Softbank?
[1] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2427345
[2] https://www.bloomberg.com/view/articles/2015-04-16/should-mu...
This is pretty much it. A generic strategy for most of "megafunds"
If two companies can make more together than apart, they're going to merge. Whether the shareholders are common or discrete doesn't change that incentive.
What does change is each side's tolerance for transaction costs. Mergers are expensive because both sides argue (a lot) over how to split the expected premium. If there is no argument, the transaction cost goes down. Merger costs going down means merger frequency goes up; consolidation occurs.
Stock swaps are a cheap way to "merge" without merging. Combining Uber and Grab would reduce consumer choice in both markets. The same occurs when they mutually dis-engage. In a traditional acquisition, the acquirer would have to agree on a price with the acquired. That doesn't need to happen, or at least as precisely, here.
All that said, these deals do look like Softbank trying to get around antitrust rules. If Uber and Lyft split the U.S. market across the Mississippi, lawmakers would likely frown [1].
As an aside, Lei does some awesome videos on technology and definitely worth a subscription!
That guy would disagree I think.
If this is how loosing looks like I want more losses like this.
However, returning recently, for me (at leat anecdotally) it’s almost infeasible to order an Uber here now due to their low driver rates. Grab seems to be everywhere, but with rates similar to Uber, I do wonder what went wrong. I was thinking only the other day that it feels like Uber let this opportunity slip through their fingers.
Both platforms are vastly cheaper than their western services ($1 for over a mile). They also both offer ‘moto’/motorcycle hire for one-person rides which is extremely convenient... I’m wondering why we don’t have similar services in the built-up western cities such as London or New York.
My one trip to Malaysia, I found Grab to be the cheaper choice.
source: living in Vietnam for ~1 year.
Grab did a better job of having an offering that fit the local markets, whereas Uber tried to fit its US model here. It has since adapted but Grab has always executed faster and better.
Grab showed up front pricing first. Grab allowed paying by cash. GrabPay has been (somewhat) adopted by other companies.
So how does that work? Do drivers get a statement at the end of the month on how much they owe Grab? Is it itemized by ride, or juts aggregated?
oh and the marketing problem too, they changed their uniform and colour them for a few times while Grab just sticks with green. I just don't feel they have a clear strategy for anything at all.
Whenever door-to-door self-driving eventually arrives, it won't be in a timeframe that's remotely interesting to current investors in these services.
And, as you say, while a lot of people probably overestimate the driver cost as a percentage of a taxi ride in developed Western countries, it truly is almost negligible in Southeast Asia. It's very common for people to have full-time drivers.
Throw in motorists and bicyclists that are constantly swerving between lanes and inches from cars. Seeing current videos of how self-driving cars react, it would constantly be jerking in different directions.
There are also lots of local habits that self-driving cars would need to be trained to do, eg in Nepal when in a two lane and you spot an oncoming car, you turn on your right blinker to signal you see each other and can pass safely.
I like it when inventors subsidize my life style in an effort to get market share. Hope gojek can become a competitor in the markets I go to so that those discounts start again.
https://qz.com/1187144/softbank-not-uber-is-the-real-king-of...
Softbank/Saudi Arabia is going to control the global taxi market.
But I agree, before Uber left the Chinese market, there was more pressure to be customer friendly. And the regular promos (with ridiculous amounts of free rides) where also nice from a customer perspective.
...
Based on a financial earnings criteria excluding expenses like stock-based compensation — a significant portion of how Uber rewards its employees — the company said it lost $475 million in the fourth quarter compared with a loss of $607 million in the prior three-months period."
https://www.nytimes.com/2018/02/13/business/uber-earnings-ip...
Personally, so far, I'm not impressed with grab's software and epayments infrastructure in Indonesia, compared to uber where I can use my card and pay for any of my wifes/friends usage without having to think about things like topping up or buying credits (though to be fair, a lot of platforms in Indonesia [maybe even SE Asia] seem to have the same situation regarding payments, with worse software). Maybe this will change, but right now it feels like a demotion.
Here's to hoping a decentralized platform for ride hailing can come into existence in the future and remove the reliance on SoftBank's will to unify the market on their terms.
[0] https://help.uber.com/h/1e6cfc45-10da-416c-a7a3-d13f75505c34