Uber is set to announce a $3.1 billion deal to acquire Dubai-based transport firm Careem as early as Tuesday, Bloomberg reports, in an interesting turn in strategy ahead of its IPO.
When Uber has had difficulty gaining a foothold in a foreign market in the past, it has sold off local operations to the domestic competitor in exchange for a stake in the company. This happened in China in 2016, in Russia in 2017, and in Southeast Asia in 2018.
Apparently, Uber thinks the Middle Eastern market is worth fighting for. The firm has a $3.5 billion investment and a board member from Saudi Arabia’s Public Investment Fund, while Saudi Prince Al-waleed bin Talal is a major backer of Careem.
Bin Talal’s Kingdom Holding Co. and Japanese e-commerce company Rakuten Inc., have been asked to agree to the terms of the transaction by Monday evening, Bloomberg reports. The U.S. ridesharing monolith will pay $1.4 billion in cash and $1.7 billion in convertible notes for Careem; the notes will be convertible into Uber shares at a price equal to $55 per share.
Uber’s potential acquisition of Careem comes just ahead of its monster initial public offering. Uber’s IPO on the New York Stock Exchange is expected to be one of the biggest of the year, with the company potentially being valued at $120 billion.
Careem’s business was reportedly valued at $2 billion after its most recent funding round in late 2018. Founded in 2012, it reports over a million drivers operating in more than 90 cities and 15 countries across the Middle East and Northern Africa. It has also expanded into food and package deliveries, bus services, scheduled rides, and credit transfers, in some cases beating Uber into the markets.