Surge pricing?… Doesn’t stop Uber from spending $3.1B on “the Uber of the Middle East”: Careem. The deal had leaked before — Tuesday’s surprise was that Uber closed it just weeks before it plans to go public. Most companies would be focused on their IPO right now. Uber’s not most companies.
Uber is buying 100% of its regional rival Careem
Let someone else drive… That’s been Uber’s go-to move abroad. It’s buying 100% of its regional rival Careem, but typically it invests in just a percentage of its competitors so they can keep running their own company. This way if a competitor wins, it wins. And a bunch of Uber copycats copy that same strategy:
- Uber owns 37% of Russia’s Yandex, and 28% of Southeast Asia’s Grab. And it used to own 20% of China’s Didi but then sold it back to Didi.
- Didi invested $600M in Brazil’s ride-hailer, 99 Taxis.
- Gett, which is Israeli, owns part of New York’s Juno.
- It’s incestuous competition in ride-hailing, defined by the Uber of (blank) cozying up with the Uber of (blank).
THE TAKEAWAY
International is Uber’s differentiator… With Lyft about to IPO Friday and Uber aiming for April, both are about to become available to public investors. Uber’s not just bigger, it’s also more internationally sophisticated. It’s studied abroad plenty, so an investment in Uber could be exposure to Earth-wide ride-sharing.
FYI, Careem is The Middle East’s biggest tech startup sale ever — Here’s what Uber’s Iranian-born CEO emailed Uberites about it:
Read CEO Dara Khosrowshahi’s email to Uber staff on the Careem acquisition
“It’s a great day for the Middle East, for the region’s thriving tech sector, for Careem, and for Uber,” CEO Dara Khosrowshahi told staff in an email.
Uber confirmed its $3.1 billion acquisition of ride-hailing service Careem on Tuesday.
On Tuesday, CEO Dara Khosrowshahi sent this email to his staff on Uber’s acquisition of Careem.
From: Dara
To: Team@
Date: March 25, 2019 at 11:45pm PT
Subj: Accelerating in the Middle East
Five years ago, Uber launched in the Middle East. It was the start of an incredible journey, with millions of riders and drivers finding new ways to move and work in a dynamic region that’s become so important to Uber. Now Pakistan is one of our fastest-growing markets in the world, women are driving with Uber across Saudi Arabia, and we chose Cairo to launch our first Uber Bus product late last year.
Today we are taking the next step in this journey—well, it’s more like a leap, and a big one: in a few minutes, we’ll announce that we’ve agreed to acquire Careem. Importantly, 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.
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.
This acquisition is subject to regulatory approval in various countries, which we don’t expect before Q1 2020. Until then, nothing changes. And since both companies will continue to largely operate separately after the acquisition, very little will change in either teams’ day-to-day operations post-close.
Today’s news is a testament to the incredible business our team has worked so hard to build. It’s a great day for the Middle East, for the region’s thriving tech sector, for Careem, and for Uber.
Uber on,
Dara
Source: Robinhood Newsletter
