One of the leading names in the ride-hailing services arena, Uber has acquired its Middle East rival Careem in an acquisition deal worth $3.1 billion — with $1.7BN to be paid in convertible notes and $1.4BN in cash, according to a report by TechCrunch. The deal is expected to close in Q1 2020, pending applicable regulatory approvals.
As per the deal, Uber will acquire all of Careem’s businesses across the greater Middle East region, which ranges from Morocco to Pakistan. Currently, Careem operates in 120 cities across 15 countries in total.
The startup till now has raised $772M and the investors include Saudi Arabia’s Kingdom Holdings, Chinese ride-hailing giant Didi Chuxing, and Japanese tech giant Rakuten. The price Uber is paying for the acquisition is higher than the recent valuation of the company which pegged it at $2 billion.
Speaking about the acquisition, Uber CEO Dara Khosrowshahi said:
“This is an important moment for Uber as we continue to expand the strength of our platform around the world. With a proven ability to develop innovative local solutions, Careem has played a key role in shaping the future of urban mobility across the Middle East, becoming one of the most successful startups in the region. Working closely with Careem’s founders, I’m confident we will deliver exceptional outcomes for riders, drivers, and cities, in this fast-moving part of the world.”
Once the deal is closed, Careem will be a fully owned subsidiary of Uber but will continue to operate under its own brand. It remains to be seen how the brands will operate in cities like Casablanca or Cairo, where the two brands overlap.
Another thing that remains to be seen is the fact that how the consolidation of two regional ride-hailing rivals will have a positive impact on prices for such services in the region which is good news for customers.
Another aspect of the deal that sounds perfect for Uber is that the oil-rich Middle East, with ‘lighter touch’ regulation and high temperatures, is a perfect combination for air-conditioned transportation, and therefore offers a more reliable demand base for Uber.
It is worthwhile to mention here that Uber’s long-trailed IPO is finally happening next month. Bagging Careem now offers Uber some positive spin to pitch to potential shareholders ahead of going public.