Uber Set to Acquire Mideast Ride-Share Start-up Careem for $3.1 billion

US ride-share giant Uber Technologies hopes to acquire Mideast rival Careem for $3.1 billion
John Loeffler

This week, Uber is expected to announce its acquisition of Mideast rival ride-share start-up Careem, at a reported cost of $3.1 billion.

Uber Set to Acquire Mideast Rival Careem

Uber Technologies Inc. is expected to announce as soon as Tuesday that they have signed a deal to acquire Careem Networks FZ, a Mideast ride-share rival of Uber, according to a report by Bloomberg today.


The acquisition of will reportedly cost Uber $3.1 billion overall, with $1.4 billion paid in cash and $1.7 billion paid in convertible notes to Careem shareholders. These notes can be turned into shares in the US ride-share giant, at a price of $55 a share, once Uber files for its initial public offering on the New York Stock Exchange, expected in April.

The deal is awaiting final approval by Careem shareholders, which include the investment firm of Saudi Prince Alwaleed bin Talal and the German automaker Daimler. The shareholders have until Monday evening to agree to the takeover. If approved, the deal could be announced the following day.

Acquisition Comes Ahead of Uber's Highly-Anticipated IPO

The acquisition of Careem is another set piece in the lead-up to Uber’s upcoming IPO, which it is expected to file publicly in April. Uber’s listing is expected to kick off a flurry of trading that could raise the company’s value as high as $120 billion.

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That would be a huge windfall for Careem shareholders. The Dubai-based startup had a valuation of around $1 billion as recently as 2016, though like Uber and Lyft, it has yet to show profitability.

Operating in more than 90 cities in over a dozen countries in the region, Careem has more than 30 million users. A merger would be advantageous for both companies as it would eliminate the costs associated with competing in the same market.

This would give Uber control over the vast majority of the Mideast market, but that may not be sufficient to give it the leverage it needs to actually become profitable.

"The bigger issue is that even with dominance, there is no evidence that any of these companies can actually earn sustainable profits while providing the level of fares and car availability that made them popular," says independent transportation consultant Hubert Horan.

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