Uber, the San-Francisco based taxi-hailing platform that has dominated the US and East African region has finally come to a USD 3.1 Bn agreement to acquire its rival Careem, the largest tech deal to happen in the Middle East region and among the highest globally in ride-hailing mergers and acquisitions.
Uber has been known for its aggressive expansion and tactics to dominate the ride-hailing space and this agreement to acquire its rival does not come as a shock.
The transaction which is expected to close in Q1 2020 consists of USD 1.7 Bn in convertible notes and USD 1.4 Bn in cash where Uber reportedly had to sell USD 1.2 Bn in junk bonds to help fund the purchase. The acquisition will see Uber expanding in the larger Middle East Region market boosting the rapid expansion of both companies.
“This is an important moment for Uber as we continue to expand the strength of our platform around the world,” said Uber CEO, Dara Khosrowshahi. “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.”
Much speculation had arose over whether the deal would go through. The deal initiated in March this year had taken several months to come to a conclusion due to many stampedes trying to suppress the transaction including being banned from operating in Egypt.
Under this agreement Careem will be a wholly-owned subsidiary of Uber, operating under the Careem brand and led by its founders. 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.
Careem which plans to be the ‘super app of the Middle East’ is a Dubai-based ride-hailing platform founded in 2012 that has operations in around 100 cities in the Middle East, North Africa, Pakistan and Turkey. It has been in the news recently for its expansion across the region as well as into tier two cities. What’s more, it has delved into the food delivery space and has introduced P2P instant credit transfers for Careem rides.
“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. 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. We could not have found a better partner than Uber under Dara’s leadership to realise this opportunity. This is a milestone moment for us and the region, and will serve as a catalyst for the region’s technology ecosystem by increasing the availability of resources for budding entrepreneurs from local and global investors,” said Careem CEO and co-founder, Mudassir Sheikha.
Featured Image Courtesy: Reuters