Buys Dubai-based rival Careem for $3.1 billion
San Francisco-based Uber has signed a deal to buy Dubai rival Careem for $3.1 billion. Uber is focussed on growth as it moves toward an initial public offering in April 2019 that would value the company at close to $120 billion. Under the terms of the deal, Careem will operate as a wholly-owned subsidiary of Uber, preserving its brand.
Careem was launched in Dubai in 2012 and was worth more than $2 billion at the time of its last funding round, when it raised $200 million. Shareholders in Careem include Saudi Prince Al-Waleed bin Talal’s investment firm and Japanese e-commerce company Rakuten.
Careem is widely seen as a technology success story in a region that’s home to over 400 million people. The company operates in 15 countries and more than 100 cities across the region, and has raised close to $800 million in investments. Interest in Middle Eastern technology start-ups is high, as companies seek to profit from the region’s wealthy consumers and high smartphone penetration rates. Careem is one of a growing number of homegrown technology companies that are increasingly attracting the eyes and money of foreign buyers.
The acquisition of Careem is a departure in strategy for Uber, which has divested itself from costly international operations in the past. In 2016, it sold its business in China to Didi Chuxing and its Russian arm to Yandex. Two years later Uber sold its operations in Southeast Asia to regional rival Grab (see Uber Refines Its Global Strategy). In most cases, it kept a share of the remaining company as part of the price. Uber’s previous full acquisitions have involved important technologies like maps, or transportation companies in other sectors such as bikes or self-driving trucks. But as it gears up to go public next month, Uber thought the opportunity to get control of Careem was too special to resist, giving it a valuable advantage in the Middle East.
By buying Careem, Uber will essentially be the only ride-sharing service in the region, making it even more attractive stock for investors. And this was likely to have been a big motivation for Uber to close and announce this deal before its initial public offering.
Uber’s US rival Lyft is also expected to debut on the Nasdaq stock exchange in the next few weeks, in a listing that could value the company at $25 billion.
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