Ride hailing specialist Uber is to expand its global presence with a USD3.1 billion deal to acquire a rival in the Middle East. The company will acquire all of the Careem mobility, delivery and payment operations across the greater Middle East region, though the latter’s strong, established brand presence mean it will continue to operate under its own brand as a wholly-owned subsidiary.
Over the past six years, Dubai-based Careem has built a notable presence with an offering that now extends to 120 cities across 15 countries, with a particularly strong penetration across major markets such as Egypt, Jordan, Pakistan, Saudi Arabia and United Arab Emirates (UAE).
The transaction represents more than a 50% premium on the estimated USD2 billion value of Careem. It still remains subject to regulatory approval in various countries and is expected to close in the first quarter of 2020.
Under the tentative terms of the takeover, Careem’s current CEO and co-founder Mudassir Sheikha will continue to manage the business and report to a joint board consisting of three representatives from Uber and two from Careem. Joining forces with Uber will help the company “accelerate Careem’s purpose of simplifying and improving the lives of people, and building an awesome organisation that inspires,” according to the executive.
In a joint statement the companies claim that the agreement is the largest-ever technology industry transaction in the greater Middle East region. It also confirms the decision to continue operating as independent structures as being “the best thing for the brands moving forward”.
“After careful consideration, we decided this framework has the advantage of letting us build new products and try new ideas across not one, but two strong brands, with strong operators in each,” according to Uber CEO Dara Khosrowshahi.
Careem was established in 2012 by Mudassir Sheikha and Magnus Olsson, two former McKinsey consultants who wished to develop a local venture with a regional vision. They were later joined by a third co-founder, Dr Abdulla Elyas, when Careem acquired Jeddah-based address coding service Enwani in 2014. In 2015, Careem acquired Morocco-based car booking service TAXIII, and most recently, in 2016, Pakistan start-up Savaree.
The greater Middle East region is already seeing the economic and social benefits of rapid technology adoption and improved access to transportation. Careem and Uber say the transaction will “improve the region’s transportation infrastructure at scale and offer diverse mobility, delivery and payment options”. They say it will also “speed up the delivery of digital services to people in the region through the development of a consumer-facing super-app”. This will offer services such as Careem’s digital payment platform (Careem Pay) and last-mile delivery (Careem NOW).