23 Apr 2019, Stella Zlatareva, EMIS M&A Team
Careem was Uber's unique chance to buy a dominant rival in an emerging market
Unable to organically achieve the same growth and overtake the local expertise of other Asian rivals, Uber had so far been forced to retreat by exchanging its operations in China, Southeast Asia, and Russia for minority stakes in Didi, Grab, and Yandex, respectively. In that sense, the Careem deal is a triumphant U-turn for Uber’s international strategy.
Established in 2012 by two ex-McKinsey consultants as an executive car service, Careem owns and operates a ride-hailing platform in over 90 cities across 15 countries (UAE, Qatar, Saudi Arabia, Bahrain, Lebanon, Pakistan, Kuwait, Egypt, Morocco, Jordan, Turkey, Palestine, Iraq, and Sudan). Apart from the rides carried out by the company’s more than one million drivers, Careem provides food delivery and digital payments. Thus, it shares Uber’s platform vision.
Careem, which will continue to operate using its own widely recognized brand, also comes with a noteworthy market share, a foothold in places yet unreached by Uber (e.g. Morocco, Iraq), and an enviable reputation among its drivers and customers alike.
Overall, it seems the Dubai-based company would provide a much needed growth promise at a time when loss-making Uber pitches to prospective IPO investors while being locked in a fierce price war with Lyft in the maturing U.S. market. Careem investors have to hold their breath a bit more as the notes convertible into Uber shares at a price of USD 55 apiece could turn out to be much more lucrative after the giant goes public. Original source: EMIS - DealWatch