On-demand ride provider Uber yesterday confirmed it has agreed to acquire United Arab Emirates-based ride hailing service Careem for $3.1bn, providing exits for corporates Rakuten, Saudi Telecom, Al Tayyar, Didi Chuxing and Daimler.
The price will consist of $1.4bn in cash and $1.7bn in convertible notes, which will be convertible to Uber stock at a price of $55 per share, people with knowledge of the matter told Bloomberg. Uber expects to file for its initial public offering in the coming weeks.
Careem operates a ride hailing platform that covers more than 100 cities in the Middle East, Africa, Turkey and Pakistan in addition to a digital payment business, Careem Pay, and a last-mile delivery service called Careem Now.
Mudassir Sheikha, co-founder and CEO of Careem, will keep leading the business post-acquisition and it will continue to operate under its own brand. It will be run by a board consisting of three directors from Uber and two from Careem.
The deal comes after a series of deals where Uber divested its local businesses in China, Russia and Southeast Asia to rivals in all-share transactions, and it was rumoured to be exploring a similar move with Careem in July 2018. Reports over the past few months have indicated it could float at a valuation of $100bn or more.
Dara Khosrowshahi, chief executive of Uber, said in a statement announcing the deal: “This is an important moment for Uber as we continue to expand the strength of our platform around the world.
“With a proven ability to develop innovative local solutions, Careem has played a key role in shaping the future of urban mobility across the Middle East, becoming one of the most successful startups in the region.
“Working closely with Careem’s founders, I am confident we will deliver exceptional outcomes for riders, drivers, and cities, in this fast-moving part of the world.”
Careem has raised in excess of $770m in funding, most recently securing $200m from e-commerce company Rakuten, travel services provider Al Tayyar, telecommunications firm Saudi Telecom’s STV unit and investment holding company Kingdom Holding in October 2018 at a reported valuation of $2bn.
Chinese counterpart Didi Chuxing invested an undisclosed amount in the company in August 2017, two months after it closed a $500m series E round where the first tranche had been co-led by Saudi Telecom and Rakuten.
The series E round also featured Al Tayyar, automotive manufacturer Daimler, Kingdom Holding, DCM Ventures, Coatue Management, Abraaj Group, Lumia Capital, Wamda Capital, Beco Capital, El Sewedy Investments, Endure Capital and SQM Frontier.
Saudi Telecom subsidiary STC Ventures provided $1.7m of funding for the company in 2013 before joining Al Tayyar to add $10m the following year. Both returned for a $60m series C round in 2015 that included Abraaj, Beco Capital, Lumia Capital, Wamda Capital and Impulse.
Jeffries was financial adviser to Careem on the transaction, which is expected to close in early 2020.
This story was adapted from an earlier version of the article published on March 25, before the deal had been officially confirmed.
