DUBAI, March 27, 2019 (BSS/AFP) – Global ride-hailing giant Uber will
acquire its Middle East rival Careem for $3.1 billion in the region’s largest
technology industry transaction, the two companies announced on Tuesday.
The deal would boost Uber’s worldwide presence ahead of a keenly
anticipated stock market debut.
Egypt, a major market for the two firms, announced later on Tuesday that
it would open an investigation into the deal’s impact on competition in the
country.
Under the deal, Careem is to become a wholly owned subsidiary of Uber but
the two app-based transport and delivery companies would continue operating
independently, a joint statement said.
“Careem and Uber are joining forces. We have reached an agreement in which
Uber will acquire Careem for $3.1 billion,” the statement said.
Careem said it would retain its branding, services and separate app in the
greater Middle East region. It was expanding its services to include mass
transportation, delivery and payments.
Uber would pay $1.4 billion in cash and the remaining $1.7 billion in
convertible notes, the joint statement said.
“Uber will acquire all of Careem’s mobility, delivery, and payments
businesses across the greater Middle East region, ranging from Morocco to
Pakistan, with major markets including Egypt, Jordan, Pakistan, Saudi Arabia,
and the United Arab Emirates,” it said.
The acquisition comes as Uber prepares for its initial public offering —
expected next month — which could, according to some estimates, see the
rideshare giant’s value increase to $100 billion.
– ‘Massive, untapped’ –
Dubai-based Careem, established in 2012, boasts more than a million
drivers and 30 million users across 120 cities in the Middle East and North
Africa.
Uber, established in 2010, entered the Middle East market two years after
the creation of Careem and the two companies remained in direct competition
in a fast-developing market.
Uber chief executive Dara Khosrowshahi described the move as important for
the company’s expansion plans.
“This is an important moment for Uber as we continue to expand the
strength of our platform around the world,” Khosrowshahi said.
“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.”
Careem chief executive and co-founder Mudassir Sheikha welcomed the
acquisition, saying it would be good for customers.
“Joining forces with Uber will help us accelerate Careem’s purpose of
simplifying and improving the lives of people, and building an awesome
organisation that inspires,” Sheikha said.
“The mobility and broader internet opportunity in the region is massive
and untapped, and has the potential to leapfrog our region into the digital
future.”
The acquisition, which is subject to regulatory approvals, is expected to
close in the first quarter of 2020.
The Egyptian Competition Authority said it would wait for formal
notification of the deal from the two companies before launching an
investigation.
Uber’s acquisition of Careem “could eliminate competition on the markets
in which the parties operate”, it said, adding both had “committed not to
implement the agreement… until the ECA makes its final decision.”
The two companies said that together they will be better placed to improve
the region’s transportation infrastructure at scale and offer diverse
mobility, delivery and payment options.
It will also speed up the delivery of digital services to people in the
region through the development of a consumer-facing super-app that offers
services such as Careem’s digital payment platform (Careem Pay) and last-mile
delivery (Careem NOW), they said.