Uber to buy Middle East rival Careem for $3.1 bln

Uber will spend 3.1 billion U.S. dollars to acquire Middle East rival Careem, buying dominance in a competitive region ahead of a hotly anticipated initial public offering.

Uber said late Monday night it would pay 1.4 billion U.S. dollars in cash and 1.7 billion U.S. dollars in convertible notes in a deal that gives it full ownership of Careem. The long-expected agreement ends more than nine months of start-and-stop negotiations between the two companies and hands Uber a much-needed victory after a series of overseas divestments.

The deal is expected to close in the first quarter of 2020. It is still subject to regulatory approval, including by antitrust officials in the countries where Careem operates, which could prevent the deal from moving forward or compel the companies to modify the terms.

The deal is particularly important for Uber, whose ability to be a competitive global ride-hailing player had come into question after it sold its operations in China, Russia and Southeast Asia to local rivals after sustaining heavy losses.

Uber will kick off its IPO next month and is expected to receive a valuation of at least 100 billion U.S. dollars. The deal enables Uber to claim dominance in a growing region for ride-hailing outside of the United States.

Saudi national and newly licensed Reem Farahat, an employee of Careem, prepares for a customer. /VCG Photo

Careem, founded in 2012, has a larger presence than Uber in the Middle East, North Africa, Pakistan and Turkey, operating in 98 cities there compared with Uber's roughly 23 locations.

Uber said its revenue last year was 11.3 billion U.S. dollars, while its gross bookings from rides were 50 billion U.S. dollars. But the company lost a staggering 3.3 billion U.S. dollars, excluding gains from the sale of its overseas business units in Russia and Southeast Asia.