Uber Technologies Inc is all set to offer a deal for around $3 billion for Careem Networks FZ, its Dubai based rival. According to sources, Uber’s offer will probably be revealed early this week.
Uber will pay $1.7 billion in convertible notes and $1.4 billion in cash. The convertible notes can be converted to Uber shares at $55 per share according to reports from Bloomberg.
Careem spokesman declined to comment, and Uber did not respond immediately to a request from Reuters for comment.
Uber has already started on its path for an initial public offering. Bankers have valued Uber to worth over $120 billion.
Uber is a U.S. based global logistics and transportation company that has been successful in seeking new avenues of growth to date. Although it faces fierce competition from rivals in different regions, Uber has been able to grow and capture a fair amount of the market.
The IPOs of Uber and Lyft is a change from how technology firms based in Silicon Valley often snub the stock market and try to raise capital privately.
The shareholders in Careem, which include Rakuten Inc, a Japanese e-commerce company as well as an investment firm owned by Saudi Prince Alwaleed bin Talal have been requested to agree to the terms by Monday evening. This will allow the deal to be announced by Tuesday according to sources.
Uber’s takeover of Careen comes ahead of its IPS which is expected to be one of the biggest ever listings on the New York Exchange. Careem has been valued at around $1 billion during a funding round in 2016. This makes Careem one of the most valuable startups in the technology field in the Middle East. The company employs over a million drivers and operates in over 90 cities across 15 countries which include UAE, Lebanon, Bahrain, Pakistan, Kuwait, Saudi Arabia, Turkey, Jordan, Iraq, Sudan, Egypt, and Morocco.
Uber’s takeover of Careem will lead to a void in the industry leading to a monopoly. This might cause fares to go up which will be difficult for customers in the region until a local company offers a better alternative. Commuters in the MENA region will need to get ready for high fare rates once the merger takes place.
The takeover of Careem will offer Uber new growth as it gets ready for its IPO kickoff in April. At present Uber has been valued by bankers to be worth over $120 billion.
