Uber Acquires Careem Networks At $3.1 Billion

The announcement by Uber Technologies Inc. about their plans to acquire Careem Networks has materialized. Uber and Careem have reached an agreement for Uber to acquire Careem for $3.1 billion, consisting of $1.7 billion in convertible notes and $1.4 billion in cash. The acquisition of Careem is subject to applicable regulatory approvals. The transaction is expected to come to a close in Q1 2020.

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.

Upon closing, Careem will become a wholly-owned subsidiary of Uber, preserving its brand. Careem co-founder and CEO Mudassir Sheikha will lead the Careem business, which will report to its own board made up of three representatives from Uber and two representatives from Careem. Careem and Uber will operate their respective regional services and independent brands.

The shareholders in Careem who include the investment firm of Saudi Prince Alwaleed bin Talal and the Japanese e-commerce company Rakuten Inc have been instructed to agree to the terms of the transaction as soon as possible so that the deal can also be announced soon. The spokesman for Uber Matt Kallman chose not to comment and the spokesman for Careem was unavailable to share his input concerning the same.

Uber’s planned acquisition of Careem comes ahead of its imminent initial public offering, which could be one of the New York Stock Exchange’s biggest-ever listings. Uber is expected to publicly file for an IPO in April, kicking off a listing that could value the company at as much as $120 billion, people familiar with the plans have said previously.

The acquisition will come as a welcome boost for the Middle East’s nascent technology startup market and follows Amazon.com Inc.’s acquisition of Dubai-based online retailer Souq.com for $580 million in 2017. With Arab governments seeking to diversify their oil-based economies, young and tech-savvy entrepreneurs are starting new businesses and getting investors to back them.

The value of Careem was estimated to be around $i billion towards the end of 2016 making it one of the most valuable technology startups in the middle east as per that time. Its backers also include STV, the venture capital fund launched by Saudi Telecom. Co., Al Tayyar Travel Group Holding Co., and Daimler AG.

The greater Middle East region is already seeing the economic and social benefits of rapid technology adoption and improved access to transportation. This transaction supports the collective ability of Careem and Uber to improve the region’s transportation infrastructure at scale and offer diverse mobility, delivery and payment options. It will speed up the delivery of digital services to people in the region through the development of a consumer-facing super-app that offers services such as Careem’s digital payment platform (Careem Pay) and last-mile delivery (Careem NOW).

This transaction brings together Uber’s global leadership and technical expertise with Careem’s regional technology infrastructure and proven ability to develop innovative local solutions. Both companies believe it will provide an opportunity to expand the variety and reliability of services offered, at a broader range of price points to serve more consumers. Similarly, for drivers and captains, the companies believe an increase in trip growth and improved services could provide better work opportunities as well as higher and more predictable earnings through greater utilisation of drivers’ time on the road.