Uber has recently been in the news for pulling out of overseas markets. That is not the case in the Middle East, however. Currently, Uber is finalizing a deal to acquire its local rival, Careem in a USD 3.1 billion deal, based on reports in the Financial Times and Bloomberg.
Careem has grown at a very fast pace and was valued at about USD 1 billion in a 2016 funding round and USD 2 billion in 2018. It is one of the few venture capital success stories in the Middle East and currently has operations spread across 90 cities in 15 countries and over 30 million users throughout the Middle East, North Africa, and South Asia.
Uber and Careem are the two main players in the ride-sharing segment and a merger between the two companies could result in a monopoly in markets where there are no rival companies. The main investors in Careen include the Japanese company Rakuten Inc. and the Kingdom Holding Company, an investment firm which is run by the Saudi Prince Alwaleed bin Talal.
Uber has previously used such acquisitions to eliminate the possibility of price wars with rival firms. Similar acquisitions include the purchase of competitor Yandex in Russia, the sale of its operations in the Southeast Asian market to Grab and the sale of its operations in China to DidiChuxing. Uber is shortly planning to launch an initial public offering, and the company’s valuation could be as high as USD 120 billion for the IPO.
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