Uber announces acquisition of middle eastern competitor, Careem, for $ 3.1 Billion, which will be completed in coming seven to eight months.

Middle East:  Ride-hailing major, Uber, announced acquisition of Dubai based Careem for $ 1.4 billion in cash and $ 1.7 billion in convertible notes. The deal is expected to close in the first quarter of 2020, and Careem to eventually become a wholly owned subsidiary of Uber. The acquisition of Careem is subjected to applicable regulatory approvals in 15 countries in which the company operates.

Careem is a Dubai based start-up that has grown into the largest ride-hailing app in Middle East since it was founded in 2012. The company has more than 30 million users and one million drivers across 14 market. While Uber is a California, US based company with 100 million worldwide users. The company operates in over 70 countries but faces rivals in India and Latin America and tough regulations in Europe.

Co-founder of Careem stated that, “The acquisition makes Careem a wholly owned subsidiary of Uber and will keep the Careem brand and app intact, at least initially. However, Careem’s board will be overhauled, with three seats going to Uber representatives and two belonging to Careem.”

According to TechSci Research, the acquisition would allow Uber in cutting its costs and expanding its footprint in the region as the deal will give Uber access to countries like Iran, Morocco and Palestine, where it doesn’t operate. Factors such as rising urbanization, growing young population, increasing investments by several major players in ride hailing services, and surging number of internet and smartphone users are driving the ride hailing market in Middle East & Africa.  

According to a report published by TechSci Research, “Middle East & Africa Ride Hailing Market By Vehicle Type (Passenger Car & Micro Mobility Vehicle), By Internet Connectivity (3G, 4G, 5G & Wi-Fi), By Service Type, By Vehicle Connectivity, By Country, Competition Forecast & Opportunities, 2017-2023”, Middle East & Africa ride hailing market is projected to grow from around $ 2.4 billion in 2017 to $ 7.3 billion by 2023, exhibiting a CAGR of over 20% during the forecast period. Key factors expected to drive demand for ride hailing services in the region are rising urbanization, growing young population, increasing investments by several major players in ride hailing services, and surging number of internet and smartphone users. Moreover, ease of booking and enhanced passenger comfort offered by ride hailing services are likely to further propel growth in the Middle East & Africa ride hailing market during the forecast period.

According to another TechSci Research report, “Global Ride Hailing Market, By Vehicle Type (Passenger Cars, etc.), By Service Type (E-hailing, etc.), By Internet Connectivity (3G, etc.), By Vehicle Connectivity (V2V, V2I, etc.), By Company and By Geography, Forecast & Opportunities, 2017-2023”, the global ride hailing market is projected to grow at a CAGR of 21% to reach $136 billion by 2023, on the back of growing popularity of ride hailing services as well as the service providers such as Uber, Didi and Lyft. Moreover, surging demand for ride hailing services on a global level can be attributed to ease of booking, enhanced passenger comfort, increasing traffic congestion, rising government initiatives aimed at increasing awareness regarding the harmful effects of air pollution levels and development of semi-autonomous and autonomous vehicles. Increasing number of partnerships between domestic and international service providers, such as Uber and Didi in China, are also expected to aid the global ride hailing market during the forecast period.