Uber will buy Middle Eastern rival Careem in $3.1-billion deal, sources say
Uber Technologies Inc. is set to announce a $3.1-billion cash-and-share deal to acquire its Dubai-based rival Careem Networks as early as this week, according to people with knowledge of the matter.
The U.S. ride-hailing giant will pay $1.4 billion in cash and $1.7 billion in convertible notes for Careem, the people said, asking not to be identified because the talks were private. The notes will be convertible into Uber shares at a price equal to $55 a share, according to the term sheet seen by Bloomberg.
Shareholders in Careem, whose backers include Saudi Prince Alwaleed bin Talal’s investment firm and Japanese e-commerce company Rakuten Inc., have been asked to agree to the terms of the transaction by Monday evening and a deal could be announced as soon as Tuesday, the people said.
Uber spokesman Matt Kallman declined to comment. A spokesman for Careem wasn’t immediately able to comment.
Uber’s planned acquisition of Careem comes ahead of the San Francisco company’s imminent initial public offering, which could be one of the New York Stock Exchange’s biggest-ever listings. Uber is expected to publicly file for an IPO in April, kicking off a listing that could value the company at as much as $120 billion, people familiar with the plans have said previously.
Buying Careem would signal Uber’s commitment to the Middle East, where one of its biggest investors — Saudi Arabia’s sovereign wealth fund — is based. The acquisition would also be a departure in strategy for Uber, which in the past has used such deals to offload costly overseas operations in exchange for stakes in competitors.
The acquisition would come as a welcome boost for the Middle East’s nascent technology start-up market and would follow Amazon.com Inc.’s acquisition of Dubai-based online retailer Souq.com for $580 million in 2017. With Arab governments seeking to diversify their oil-based economies, young and tech-savvy entrepreneurs there are starting new businesses and getting investors to back them.
Careem was valued at about $1 billion in a late 2016 funding round, making it one of the most valuable technology start-ups in the Middle East at the time. Its backers also include STV, the venture capital arm of Saudi Telecom Co., Al Tayyar Travel Group Holding Co. and Daimler AG.
Careem has expanded rapidly over the last few years. It now has more than a million drivers and operates in more than 90 cities in 15 countries, according to its website. It has also branched out into food and package deliveries, bus services, scheduled rides and credit transfers — in several instances launching services before Uber does.
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