Sign up to receive 5 free days of our daily summary for tech news.

Try The Information for just $10/month for your first 3 months.

Uber Close to Acquiring Chief Middle East Rival

Uber appears close to acquiring its Middle East rival Careem, according to Bloomberg. On paper, that’s a win for Uber CEO Dara Khosrowshahi just before the company goes public, likely as soon as next month. Less competition means Uber will burn less cash than before, though the Middle East is a relatively small region and won’t be a deciding factor in Uber’s effort to be profitable.

The combined Middle East business of Uber and Careem, which were neck and neck in terms of market share, might have generated about $800 million in net revenue in 2018, if The Information’s prior estimate of the region’s ride-hailing market size is a guide. That figure is equivalent to 7% of Uber’s total net revenue for the year. On its own, Uber likely lost at least several tens of millions of dollars there last year on an EBITDA basis. Overall, Uber lost $1.8 billion in EBITDA on an adjusted basis.

As for the particulars, Bloomberg says the term sheet called for Uber to pay $1.4 billion in cash, or roughly 25% of its current cash holdings of around $6 billion, and $1.7 billion in notes that convert to Uber stock at a valuation of more than $70 billion. Uber expects to raise as much as $10 billion and go public at a valuation of more than $100 billion, so the value of Careem’s shares could appreciate significantly. Careem backer Rakuten is the biggest outside shareholder of Uber’s U.S. rival Lyft.


0 Subscriber comments

Sign up for our weekly newsletter and 5 complimentary days of our daily tech news roundup.

Already a subscriber? Log in here