Facts about Uber Acquisition to Careem

Uber acquisition Careem, the deal of 2019 ! 

Uber technologies inc. announced that $3.1 billion cash and shares deal to acquire its competitor careem, according to Bloomberg news 

It’s one of the breaking news and deals in the market Uber acquisition Careem, as uber will pay $1.4 billion cash and $1.7 billion in convertible notes for careem in the stock market of uber, with $55 per share

As Bloomberg mentioned, Uber’s payout will reflect on the operation activities for Careem

Some of Careem’s early backers are set to benefit from the deal. Riyadh-based Al Tayyar Travel Group, one of the company’s largest corporate shareholders and earliest investors, said it expects to gain at least 1.78 billion riyals ($470 million), pushing shares up more than 8 percent. Saudi Telecom expects to get about $274 million in cash and stock.

“For investors of Careem, this acquisition is a good deal as they have the minimum guaranteed price of $3.1 billion,” said Meziane Lasfer, Professor of Finance at Cass Business School in Dubai. As part of the acquisition is paid for in Uber shares, Careem investors also have “a large potential upside value” if the shares go higher than the $55 price the deal is based on.

Now, but will this deal reflect on the market ?

Careem was valued at roughly $1 billion in a 2016 funding round and $2 billion last year, and it currently claims to operate in over 90 cities in 15 countries and have over 30 million users throughout the Middle East, North Africa, and South Asia.

Good market share of careem, but what if uber want to expand their business ?, it’ll be a perfect deal for uber.

Careem was a strong competitor for uber, so getting a strong competitor help a lot to expand the business in the market and get rid of one of the main competitor help to increase the business size, as the careem’s users will use uber transportation automatically and this very welcome to the market, as happed in 2017 when Amazon.com Inc.’s bought the online retail Souq.com for $580 million which helped in increasing the revenues of Amazon.com

Simply, Uber paid not only for buy Careem but also for :

• Reduce the competition in the market
• Reduce the budget of the marketing activities that Uber was made to compete Careem like (Discounts – ads – lower prices – .. and so on)
• Avoid the global competition if Careem aimed to enter other markets, that will take a part of the market share of Uber

After the deal the both companies start to send mails to their clients, that tell the users about the cooperation between the 2 companies and the user will still use the same app with the same trade marker and nothing will change for the user. Just they start chapter 2 of the business life

Sure, the upcoming days will be interesting 🙂