In a joint statement issued earlier this morning, Uber has said that it will acquire its Dubai-based rival Careem for $3.1bn.
Uber will pay $1.4bn in cash and the remaining in convertible notes for Careem which can then be converted into Uber shares. This is Uber’s priciest acquisition ever.
The deal is expected to close in the first quarter of 2020 subject to regulatory approvals from the 15 countries where Careem operates.
Careem will continue to operate as an independent platform under its current CEO Mudassir Sheikha. In an email sent by Uber’s chief, Dara Khosrowshahi to his employees, he said, “We intend to operate Careem independently, under the leadership of co-founder and current CEO Mudassir Sheikha.
He added, “It’s a great day for the Middle East, for the region’s thriving tech sector, for Careem, and for Uber.”
Bloomberg reported yesterday that Careem’s stakeholders including Saudi Arabia’s Prince Alwaleed bin Talal’s investment firm Kingdom Holdings Company and Japanese e-commerce company Rakuten Inc. were asked to agree to the terms of the deal before the announcement.
Uber is expected to launch its IPO in April and will list on the New York Stock Exchange. It may be valued as high as $120bn. Uber has disrupted the conventional taxi industry in more than 60 countries.
In 2016, Careem was valued at $1bn, thereby making it the most valuable tech startup in the Middle East. Since its inception in 2012, Careem has rapidly expanded and has a presence in more than 90 cities, employing over a million drivers.
In January, Saudi’s Kingdom Holding Company, which has a stake in Careem, would back a merger of the Dubai firm with rival Uber, a senior official has said.
The firm took a 7 per cent stake in Careem in 2017 and was also part of a $200m fundraising round in October.