DUBAI (Reuters) – Uber Technologies Inc is set to offer more than $3 billion to buy Dubai-based rival Careem Networks FZ, the two sources familiar with the deal told Reuters, in a deal that will strengthen its activities in the Middle East.
The deal, a third source said could be unveiled in the beginning of this week, is the harbinger of the Uber-planned initial public offering that may value the company at $120 billion.
Careem, which was founded in 2012, has a bigger presence in the Middle East, North Africa, Pakistan and Turkey, active in 98 cities, compared to Uber is about 23 locations.
“An Uber-Careem merger underlines the huge potential of the car-hailing in the Middle East, but also the central position of the winning policy battles,” said Sam Blatteis, CEO of The MENA-Catalysts.
Uber will pay $1.4 billion in cash and $1.7 billion in convertible bonds, which will be converted in Uber shares, at a price equal to € 55 per share, Bloomberg bloom.bg/2OqVtpm had earlier reported, citing a term sheet.
Careem refused to comment while Uber does not immediately respond to a request from Reuters to comment.
Careem was estimated at a value of $2 billion in October.
A mobile phone with the Uber transport technology app, with the destination and the cost of the international airport, is seen in a car with a Uber driver, in Santiago, Chile, March 15, 2019. REUTERS/Rodrigo Garrido
Uber is looking to expand because it is faced with global competition in its core ride-hailing company that is active in 70 countries. Rivlas are Lyft Inc.
Careem, which says it has 33 million registered users, was founded by Mudassir Sheikha and Magnus Olsson before they are joined by Abdullah Elyas.
Sheikha and Olsson worked together with McKinsey. Careem acquired delivery services company Enwani, co-founded by Elyas, in 2014.
Careem investors are German car maker Daimler ag and China’s biggest ride-hailing company DiDi Chuxing.
It would be the second major acquisition of a Middle East-technology company, after Amazon bought Souq in 2017.
Like Uber, Careem has expanded beyond its core ride-hailing business, and last year launched a delivery service. It also provides digital payment services.
Uber, the company also includes bike and scooter rentals, cargo transport, and food delivery.
A Careem employee shows the logo of the company, delivery service Careen NOW on her mobile to the head office in Dubai, UAE, December 13, 2018. REUTERS/Satish Kumar
Uber’s revenue last year was $11.3 billion, while the total of the bookings of trips were $50 billion. But the company made a loss of $3.3 billion, excluding the proceeds from the sale of the foreign business units in Russia and Southeast Asia.
Careem is not releasing the financials.
The Success of Lyft and Uber represent a turning point in the Silicon Valley technology unicorns, which for years have snubbed the show in favor of raising capital in the private sphere, with investors happy to back their frothy valuations.
additional reporting by Hadeel Al Sayegh in Dubai and Mekhla Raina in Bengaluru; additional reporting by Alexander Cornwell Dubai; Editing by Leslie Adler, Lisa Shumaker and Keith Weir