California-based Uber, the global ride-hailing app, announced that it will buy its Middle Eastern competitor Careem for $3.1 billion. This will also be the biggest-ever technology purchase in the greater Middle East region. The Dubai-based Careem was launched in 2012 and currently operates in 15 countries across the Middle East, Africa, and Asia, with a registered user base of 30 million.
According to Uber’s website, the acquisition is subject to regulatory approvals and is expected to close in the first quarter of 2020.
Post the deal, Careem will continue to operate as an independent company led by its founders as a wholly-owned subsidiary of Uber. Both the companies’ apps will continue to operate under separate brands.
Careem will have its own board, with three representatives from Uber and two from Careem.
The transaction consists of $1.7 billion in convertible notes and $1.4 billion in cash.
The acquisition also comes at a time when Uber is approaching its much-anticipated Initial Public Offering, which could value the firm at a whopping $120 billion. If all goes well, this will be one of the biggest IPOs in the history of the tech business.
Here are the official statements from the CEOs of both, Uber and Careem.
“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. 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,” said Uber CEO, Dara Khosrowshahi.
“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. 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,” said Careem CEO and co-founder, Mudassir Sheikha.
What is UBER?
Uber is a transportation network company that provides ride service hailing, peer-to-peer ridesharing service, apart from food delivery. Founded by Travis Kalanick and Garrett Camp in 2009, it is estimated to have over 100 million users worldwide. Since its foundation, it has revolutionized the transport industry and has been prominent in shaping the sharing economy.
Despite its rapid expansion and massive growth, Uber has also been hounded by many controversies, including data breaches. It has seen fierce opposition from private taxi drivers in many countries across the globe. Further, it has faced legal issues in the United States and the United Kingdom over its classification of drivers as self-employed contractors rather than workers. More recently, its co-founder and erstwhile CEO Travis Kalanick was forced to resign on account of sexual harassment claims made by female employees.