BY Richard Summerfield
Ride-hailing giant Uber has agreed to acquire its biggest Middle Eastern rival Careem for $3.1bn.
Uber will finance the transaction using $1.4bn in cash and $1.7bn in convertible notes, bringing to an end a nine-month period of negotiation. The notes, according to Uber’s statement announcing the deal, will be convertible into Uber shares at a price equal to $55 apiece, roughly a 13 percent increase over Uber’s share price in its last financing round, which was undertaken more than a year ago. The transaction is expected to close in the first quarter of 2020 once it has received regulatory approval across several jurisdictions.
“This is an important moment for Uber as we continue to expand the strength of our platform around the world,” said Uber chief executive 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.”
“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,” explained Mudassir Sheikha, Careem’s chief executive and co-founder. “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.”
Careem will continue to operate independently under the leadership of Mr Sheikha. The Dubai-based company operates in over 120 cities stretching from Morocco to Pakistan. After raising an additional $200m in funding last year, Careem launched a delivery service in Dubai and Jeddah,Saudi Arabia in December. Uber, meanwhile, has struggled to keep up with its regional rival despite eclipsing it in terms of revenue.