Online transportation network company Uber has reached a formal agreement with its regional rival Careem to acquire the latter for $3.1 billion. The deal, which was announced on Tuesday, will see Uber pay $1.4 billion in cash, and $1.7 billion in convertible notes to technology unicorn Careem.
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. The transaction is expected to close in the first quarter of 2020.
According to the terms of the agreement, the Dubai-headquartered company Careem will become a wholly-owned subsidiary of Uber. However, it will continue to operate independently, led by Careem co-founder and CEO Mudassir Sheikha. Careem will report to its own board made up of three representatives from Uber and two from Careem. The apps of both the companies will continue to operate under separate brands. Careem and Uber will operate their respective regional services and independent brands, which comes as good news to loyal customers of the brand.
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“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,” said Uber CEO Dara Khosrowshahi in a statement released on the occasion.
Pakistan-born Sheikha said, “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.”
The news of the deal has come shorty before Uber’s initial public offering, which analysts say could increase the value of the company upto $100 billion.