KARACHI: American ride-hailing company Uber announced on Tuesday the acquisition of its largest rival, Careem, while still letting the latter operate as an independent brand under its current management.
According to a press release issued by Uber chief executive officer Dara Khosrowshahi, the company intends to operate Careem independently, under the leadership of its co-founder and current CEO Mudassir Sheikha.
About the decision to let Careem operate as an independent brand and separately, Mr Khosrowshahi said: “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.”
American ride-hailing service announces buying Dubai-based company
Uber will acquire all of Careem’s mobility, delivery and payments businesses across the greater Middle East region, ranging from Morocco to Pakistan, with major markets including Egypt, Jordan, Pakistan, Saudi Arabia and the United Arab Emirates.
Upon closing, Careem will become a wholly-owned subsidiary of Uber, preserving its brand. Pakistani entreprenuer Mudassir Sheikha will lead the Careem business, which will report to its own board made up of three representatives from Uber and two from Careem.
In an email to his employees, a copy of which is available with Dawn, Mr Khosrowshahi explained why the acquisition would not take away Careem’s independence.
“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,” he wrote, acknowledging that they were “first-class entrepreneurs” who had shared the platform vision and launched a wide range of products — from digital payments to food delivery— to serve consumers.
The Uber CEO pointed out that the acquisition was subject to regulatory approval in various countries, which was not expected to be acquired until 2020. About Uber’s expanding business, he said five years since its launch in the Middle East, Pakistan was now one of the company’s fastest-growing markets in the world and women were driving with Uber across Saudi Arabia.
The deal will see Uber pay $3.1 billion ($1.7bn in convertible notes and $1.4bn in cash).
Soon after the news of the acquisition was confirmed, Careem users expressed worry that the move was likely to affect customer experience in terms of privacy and safety — something Uber has been in hot water for.
“We will not compromise on the brand’s identity, customer care policy or independence at any cost. Customer care is what brought Careem this far, and that will be our motivation ahead,” Careem representatives told Dawn on condition of anonymity.
Published in Dawn, March 27th, 2019