To further expand its operations in the Middle East, Uber Technologies Inc is apparently preparing to acquire one of its biggest rivals in Dubai. The US-based ride-hailing firm will reportedly be making the announcement anytime this week. According to sources close to the deal, Uber has prepared a US$3.1 cash and share deal with its ride-hailing rival Careem Networks FZ.
In order to seal the deal with one of its fastest-growing competitor in the industry, Uber has offered to pay around US$1.4 billion in cash to Careem Networks. On top of the offer, Uber is prepared to give around US$1.7 billion in convertible notes to the firm if the deal pushes through. The notes can then be converted into Uber shares at US$55 per share. If all of the notes are converted, it would equate to about 30 million shares.
Careem is one of the biggest transportation networks currently operating outside of the United States. It currently has vehicles operating in more than 100 cities in over 14 countries, most of which are found in the Middle East, South Asia, and Africa. As of 2018, the company was valued at over US$2 billion; a huge jump from its US$1 billion value in 2016.
The company's shareholders, which includes Japanese e-commerce giant Rakuten Inc and Saudi Prince Alwaleed bin Talal's investment firm, have reportedly been given the offer and have until this week to accept the terms of the deal. If there is a unanimous vote to accept Uber's offer, the company will likely make an announcement to the public as early as Tuesday.
If the acquisition will push through, it will have a huge impact on Uber's upcoming initial public offering (IPO) on the New York Stock Exchange. The acquisition would likely push stock prices much higher than initially forecasted given the increased investor confidence in the company. Uber is expected to go public next month, with the company likely reaching its target valuation of around US$120 billion.
The acquisition is a slight deviation from Uber's typical strategy, which involves closing down overseas operations in favor of large stakes in its competitors. The move has been seen by some analysts as a step in the right direction, given that it would cement its presence in the Middle East, where one of its biggest investors is located. In 2016, Uber received around US$3.5 billion in new investments from the Public Investment Fund of Saudi Arabia, which is a sovereign wealth fund owned by the country of Saudi Arabia.
