Uber wants to buy Careem, its largest rival in the Middle East.
Uber plans to buy Careem, its largest rival in the Middle East, the American ride-hailing company announced on Tuesday, giving it a strong foothold in the region ahead of its expected public offering.
The deal, valued at $3.1 billion, will need regulatory approval and may not be completed until next year.
Uber’s public offering, expected next month, could reach a valuation of up to $120 billion, rivaling the 2012 listing of Alibaba, the Chinese e-commerce giant. But Uber has remained unprofitable, burning cash on subsidies for its riders and drivers in an effort to undercut its competition. In the final quarter of 2018, the company lost $865 million on revenue of $3 billion.
By taking over its main competition in the Middle East, Uber could cut its losses there. The deal with Careem will also give it access to some countries, like Iraq, Palestine and Morocco, where it does not operate.
Uber will pay $1.4 billion in cash and $1.7 billion in convertible notes. Careem will continue to operate under its own brand and remain somewhat independent of Uber. Both companies will continue to offer rides, but may test certain features on one platform before introducing them on the other.
The deal is a break from Uber’s approach in some other regions. Uber has sold majority stakes of its businesses in Russia, China and Southeast Asia to local competitors after deciding to avoid price wars in those areas. Those deals briefly put Uber in the black for the first time in the company’s history.
Read the full New York Times article here.