Uber‘s acquisition of its Dubai rival, Careem, has marked the largest technology industry transaction in the Middle East. The deal, however, is likely to be viewed as anti-competition in Egypt’s ride-hailing market.
The global ride-hailing giant (Uber) and Careem announced the development on Tuesday through a joint statement.
The deal, which is valued at $3.1 billion, gives Uber access to the Middle Eastern region which includes: Jordan, Pakistan, Saudi Arabia, and the United Arab Emirates, etc.
“Careem and Uber are joining forces. We have reached an agreement in which Uber will acquire Careem for $3.1 billion.”
Anti-competition probe: But the acquisition might have contravened some competition rules, even as the Egyptian Government has disclosed that the country would open an investigation into the deal’s impact on competition in the country.
If the deal scales the anti-competition probe, the acquisition will boost Uber’s global presence ahead of a keenly anticipated stock market debut.
About the $3.1 billion deal
The capital for the deal will be paid in two forms: Uber would pay $1.4 billion in cash and the remaining $1.7 billion in convertible notes.
Careem to retain brand: According to the joint statement released, the acquisition wouldn’t affect the brand of Careem. The company will keep to its name and company App, operating independently from Uber services in the region.
It was also disclosed that the Dubai ride-hailing company is planning to expand its services to include mass transportation, delivery and payments.
“Uber will acquire all of Careem’s mobility, delivery, and payments businesses across the greater Middle East region.”
What does Careem offer: Established in 2012, Careem boasts of more than a million drivers and 30 million users across 120 cities in the Middle East and North Africa.
Executives at both ride-hailing companies consider the deal a major boost
Top executives at both ride-hailing companies have described the deal as a much-needed boost to their services and expansion plan. For Uber, the deal comes at a period the US-based company is considering expansion and preparing its listing on the public market.
The initial public offering is expected to take place next month. And according to some estimates, the rideshare giant’s value is expected to increase to $100 billion.
“This is an important moment for Uber as we continue to expand the strength of our platform around the world.
“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.”
Meanwhile, the chief executive and co-founder of Careem, Mudassir Sheikha, said the deal will fast-track the objectives of the company, adding that there are enormous opportunities for both companies in the Middle East region.
“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.”
The acquisition is expected to close in the first quarter of 2020 if it receives regulatory approvals.
Uber Technologies, Inc. develops, markets, and operates a ridesharing mobile application. The product enables users to arrange transportation services with third party providers. The company offers UberBLACK, which provides premium rides with professional drivers; UberSELECT, an application for low cost ride; and UberSUV, an application for providing customers with sports utility vehicles. In addition, it provides Uber Eats, a food delivery application; Uber Freight, an application for logistics; and Uber Health for health related advices. It serves customers in North, Central, and South Americas, as well as Europe, the Middle East, Africa, and the Asia Pacific.
Careem Networks FZ LLC provides private car booking services. The company enables customers to order a car online; or using its mobile application, allows customers to track their rides in real-time, pay with credit cards, and access receipts online. It serves individuals, businesses, and large corporations in Dubai and Abu Dhabi, United Arab Emirates; Doha, Qatar; Riyadh, Saudi Arabia; Boston, Massachusetts; and San Francisco, California. The company was founded in 2012 and is based in Dubai, United Arab Emirates.