After much courtship, Uber has finally acquired its Middle Eastern Rival, Careem in a $3.1 billion deal which consists of $1.7 billion in convertible notes and $1.4 billion in cash. According to the U.S based ride-hailing giant, the acquisition is subject to regulatory approval in various countries and is thus expected to close in the first quarter of 2020.
Through this acquisition, Uber will gain the mobility, delivery and payments businesses across the greater Middle Eastern region including major markets like Egypt, Jordan, Pakistan, Saudi Arabia, UAE, etc.
With the completion of this deal, Careem will not cease to exist rather it will become a wholly-owned subsidiary which means both Uber and Careem will preserve their own brand identity while working as independent brands.
In an email to Uber staff members, CEO Dara Khosrowshahi explains that allowing Careem to maintain an independent brand and operate separately will give the company to “try new ideas across not one, but two, strong brands, with strong operators within each. Over time, by integrating parts of our networks, we can operate more efficiently, achieve even lower wait times, expand new products like high-capacity vehicles and payments, and quicken the already remarkable pace of innovation in the region.”
The Careem co-founder and CEO, Mudassir Sheikha will lead the Careem business which will be reporting to its own board comprising of three representatives from Uber and two representatives from Careem.
This move surely puts the U.S based company at the forefront of the ride-hailing industry and as it is seemingly planning to publicly file for its IPO in April this year, this transaction, according to some estimates, will raise Uber’s value to $100 billion or more.