Uber today announced the acquisition of its Middle East rival in a cash and stock deal that valued the company at $3.1 billion. Interestingly, Uber has decided that both Uber and Careem will continue to operate their services and brands in the region independently even after the acquisition.
“Careem’s founders will continue to lead the business. Careem will retain its name, brand, and identity. In terms of the service you know and love, nothing will change. With Uber we have a partner that is well-resourced and aligned with our vision and values. Uber has been very successful in the region and shares our ambition to simplify and improve even more lives,” said Careem in a statement.
“We accelerate our vision and collective ability to pursue the platform opportunity and leapfrog our region into the digital future. Careem and Uber will be able to focus on increasing the size of the market where there is a surplus of opportunity, simplifying and improving even more lives, in more ways,” the company added.
Uber’s CEO Dara Khosrowshahi, announcing the move, in an email to Uber employees, said, “We intend to operate Careem independently, under the leadership of co-founder and current CEO Mudassir Sheikha. I’ve gotten to know both co-founders, Mudassir and Magnus Olsson, and what they have built is truly extraordinary. They are first-class entrepreneurs who share our platform vision and, like us, have launched a wide range of products—from digital payments to food delivery—to serve consumers.”
Explaining the reason behind it, the Uber CEO added, “I expect many of you will ask how we arrived at this structure, meaning allowing Careem to maintain an independent brand and operate separately. After careful consideration, we decided that this framework has the advantage of letting us build new products and try new ideas across not one, but two, strong brands, with strong operators within each. Over time, by integrating parts of our networks, we can operate more efficiently, achieve even lower wait times, expand new products like high-capacity vehicles and payments, and quicken the already remarkable pace of innovation in the region.”
But this doesn’t mean that the consumer and captains/drivers will continue to enjoy the subsidies and discounts they’ve been receiving during the last few years. The price war that they were engaged in will come to an end which is not very good news for both consumers and captains/drivers.
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