Uber confirmed early Tuesday morning that it’s acquiring Middle Eastern ridesharing competitor Careem in a $3.1 billion deal.
The acquisition of the Dubai-based firm will give Uber a stronger foothold in the Middle East/Northern Africa region, which has a total population of about 400 million. It will also help the company move one step closer to its goal of having 1 billion users ahead of its rumored $120 billion IPO later this year, the Wall Street Journal reports. Careem, which operates in 15 countries across the Middle East and Northern Africa, was reportedly valued at $2 billion after its most recent funding round in late 2018.
What’s new since word of the impending deal spread Monday is that Uber intends to keep Careem operating as an independent brand. Careem co-founder and CEO Mudassir Sheikha will also continue to run the wholly owned subsidiary, which will report to its own board made up of three representatives from Uber and two representatives from Careem.
The acquisition will have to get regulatory approval in a number of countries before the deal can go through, however, at the earliest in the first quarter of 2020.
CEO Dara Khosrowshahi sent this email to Uber employees shortly before the deal was officially announced:
“Five years ago, Uber launched in Dubai. It was the start of an incredible journey, with millions of riders and drivers finding new ways to move and work in a dynamic region that’s become so important to Uber. Now Pakistan is one of our fastest-growing markets in the world, women are driving with Uber across Saudi Arabia, and we chose Cairo to launch our first Uber Bus product late last year.
Today we are taking the next step in this journey—well, it’s more like a leap, and a big one: in a few minutes, we’ll announce that we’ve agreed to acquire Careem. Importantly, we intend to operate Careem independently, under the leadership of co-founder and current CEO Mudassir Sheikha. I’ve gotten to know both co-founders, Mudassir and Magnus Olsson, and what they have built is truly extraordinary. They are first-class entrepreneurs who share our platform vision and, like us, have launched a wide range of products—from digital payments to food delivery—to serve consumers.
I expect many of you will ask how we arrived at this structure, meaning allowing Careem to maintain an independent brand and operate separately. After careful consideration, we decided that 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 within each. Over time, by integrating parts of our networks, we can operate more efficiently, achieve even lower wait times, expand new products like high-capacity vehicles and payments, and quicken the already remarkable pace of innovation in the region.
This acquisition is subject to regulatory approval in various countries, which we don’t expect before Q1 2020. Until then, nothing changes. And since both companies will continue to largely operate separately after the acquisition, very little will change in either teams’ day-to-day operations post-close.
Today’s news is a testament to the incredible business our team has worked so hard to build. It’s a great day for the Middle East, for the region’s thriving tech sector, for Careem, and for Uber.