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Uber confirms deal to acquire Dubai rival Careem for $3.1B

Uber Technologies Inc. confirmed March 26 it is acquiring Dubai-based rival Careem Networks FZ LLC for $3.1 billion, paving the way for the U.S. ride-hailing giant's Middle East expansion.

Careem, which was founded in 2012, operates an online ride-booking platform in 120 cities across 15 countries. It is expanding its services to include mass transportation, delivery and payments.

The deal brings together Uber's experience as a global brand and technical know-how with Careem's regional technology infrastructure, Uber said in a statement.

The transaction will include transferring Careem's mobility, delivery and payments businesses across the Greater Middle East region, including major markets like Egypt, Jordan, Pakistan, Saudi Arabia and the United Arab Emirates, to Uber.

Uber launched its ride-sharing platform in Careem's home market of Dubai in August 2013. Uber did not immediately respond to S&P Global Market Intelligence's request for comment on whether it will continue offering Uber's ride-hailing service in Dubai.

As reported earlier, the company said the purchase amount comprises $1.7 billion in convertible notes and $1.4 billion in cash. The deal is expected to be completed in the first quarter of 2020, subject to regulatory approvals.

Upon completion of the deal, Careem will become its wholly owned subsidiary, operating as an independent company retaining its brand name. Careem will continue to be managed by its existing management team, including co-founder and CEO Mudassir Sheikha, while Careem's board will consist of three Uber representatives and two Careem representatives.

Jefferies LLC acted as exclusive financial adviser to Careem on the deal.

Uber's announcement comes a day after Reuters reported that the company is speeding up its major mapping project in the Middle East in preparation for its potential expansion in the region.

The San Francisco-based transport service company is gearing up for its New York IPO in April, which could reportedly value the company at $120 billion.

Talks between Uber and Careem reportedly started in July 2018, with Bloomberg News recently reporting that the U.S. ride-hailing giant has asked Careem investors, including Saudi Prince Alwaleed bin Talal's investment firm Kingdom Holding Co., to approve the deal March 25. Careem also counts Japan's Rakuten Inc., China's Didi Chuxing Technology Co. Ltd. and German carmaker Daimler AG as its investors.