Uber is already one of the most widely known companies in the world but this fact doesn’t mean that this tech giant is going to stay at the current point. It is always ready to move further.
Acquisition of Careem
According to recently disclosed information, the company is acquiring its rival service. As it has been revealed, Uber is paying $3.1 billion for Careem, a ride-hailing app registered in Dubai.
The deal presupposes paying the entire amount with a mixture of cash and securities that will be converted into Uber shares after the firm goes public. Uber is to pay $1.4 billion in cash and $1.7 billion in convertible notes.
Given the necessity to obtain regulatory approval, it is believed that the acquisition, which is considered to be the biggest tech deal in the region, will be closed in the first quarter of 2020.
Careem was established in 2012 and since that time it has managed to achieve significant results becoming the regional market leader. Now it provides ride-sharing services in over 90 cities in 15 countries in the Middle East and North Africa including Egypt, Jordan, Pakistan, Saudi Arabia, and the United Arab Emirates. Its client base accounts for 30 million users.
In a funding round that took place in October, it was valued at more than $2 billion. Moreover, the list of its services includes delivery service known under the name of Careem NOW and services of a digital payment platform, Careem Pay.
In the framework of the deal which presupposes the acquisition of Careem by Uber, the company will become a wholly-owned subsidiary of Uber. Nevertheless, it will still its brand and the same leadership team will manage and control its operations. Careem’s mobility, delivery, and payments businesses that are expanded across 15 countries will be owned by Uber.
What It Means for Both Companies
It is said that this acquisition opens good chances for both companies to expand and get revenue in the context of the growing digital economy in the region.
Uber came to Dubai 5 years ago but it is not easy for it to push its way there as there are some other well-established ride-hailing services. That’s why this deal will help Uber to get access to the already formed client base and new financial flows. And while the company is preparing for its IPO, it is quite timely and appropriate.
Uber CEO Dara Khosrowshah stated that:
“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.”
Mudassir Sheikha Careem, CEO and co-founder, also noted that the acquisition would be beneficial for the region’s technology ecosystem as it would bring new investments.